REG - Anglo-Eastern Plant - Final results for year ended 31 December 2023
30/04/2024 07:15
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RNS Number : 5641M Anglo-Eastern Plantations PLC 30 April 2024
Anglo-Eastern Plantations Plc
("AEP", "Group" or "Company")
Final results for year ended 31 December 2023
The group comprising Anglo-Eastern Plantations Plc ("AEP") and its
subsidiaries (the "Group"), is a major producer of palm oil and to a lesser
extent rubber with plantations across Indonesia and Malaysia, amounting to
approximately 90,500 hectares, following the sale of the three non performing
plantations in South Sumatera, has today released its results for the year
ended 31 December 2023.
Financial Highlights
The Group key performance indicators ("KPI") as required in accordance with
the requirements of s414C, Companies Act 2006 are as follows:
Continuing operations 2023 2022 Change
$m $m %
Revenue 371.0 447.6 -17%
Profit before tax:
- before biological assets ("BA") movement 78.7 138.7 -43%
- after BA movement 77.8 132.9 -41%
Basic Earnings per ordinary share ("EPS"):
- before BA movement 130.24cts 245.25cts -47%
- after BA movement 128.82cts 235.74cts -45%
Dividend (cents) 30.0cts 25.0cts
Enquiries:
Anglo-Eastern Plantations Plc
Dato' John Lim Ewe Chuan +44 (0)20 7216 4621
Panmure Gordon (UK) Limited
Dominic Morley / Amrit Mahbubani +44 (0)20 7886 2500
Chairman's Statement
2023 was a year of rationalisation and consolidation for the AEP Group.
On 5 July 2023 AEP announced that it had concluded the sale of the three
non-performing plantations in South Sumatera for a total cash consideration of
$8.5 million. While the price achieved fell short of our expectations, the
positive outcome is that the Group no longer has to fund the continuing losses
of the three loss making entities, as well as not having to incorporate such
losses in the Group's operating results going forward. Following the disposal,
AEP's landbank and planted area are at 90,500 ha (2022: 128,000 ha) and 68,948
ha (2022: 76,095 ha) respectively.
During the year, the Group made enquiries on acquisition of plantation lands
but nothing materialised because of a lack of quality land or because it was
excessively priced. The Group, as part of its strategy, will continue to
maintain a disciplined strategy in seeking quality plantation land for
expansion.
The Group consolidated its holdings in its Indonesian subsidiaries by buying
back shares in nine subsidiaries from minority shareholders for a total
consideration of $87.8 million. The purchases were wholly funded from the
Group's own cash resources. The buyback of minority interests in these
profitable subsidiaries is in line with the Group's stated strategy of
consolidating AEP's holdings in these subsidiaries as reported in the 2022
Annual Report. These acquisitions are expected to enhance future earnings and
maximise shareholder value as it no longer has to apportion retained profits
to the minority shareholders going forward. With these acquisitions, AEP now
wholly-owns all its subsidiaries in Indonesia except for two.
As part of our commitment to sustainability, the Group signed three contracts
with PT KIS Biofuels Indonesia to build three BioCNG plants in North Sumatera
in the next two years. The construction costs estimated at $10.5 million are
to be wholly funded by KIS who will retain the right to operate the plants for
fifteen years under Build Own Operate Transfer ("BOOT") concept. The
Compressed Natural Gas ("BioCNG") plants draw methane from our existing biogas
plants, purify the methane content from 55% to 96% and compress the gas into
cylinders for transport to buyers to replace their fossil fuels with this
renewable BioCNG for industrial use. The Group is compensated by the sales of
methane gas, together with a share of the carbon credit sold. At the end of
the fifteen years, the operation and ownership of the plants will be handed
over to the Group at no cost with the benefits of all the future revenue
generated. The first BioCNG plant of its kind in Indonesia with a capacity to
produce up to 760 MMBTU/day was built and completed in our Blankahan mill in
late 2023, which we duly announced to the market on 2 February 2024. It
started commercial operation in January 2024 after receiving all the safety
certifications for operating. The mitigation of emission of methane gas from
this plant will result in an estimated reduction of 52,000 mt of carbon
dioxide per year resulting in 52,000 carbon credits generated. See
https://www.esdm.go.id/id/media-center/arsip-berita/pabrik-biocng-komersial-pertama-di-indonesia-diresmikan
(https://www.esdm.go.id/id/media-center/arsip-berita/pabrik-biocng-komersial-pertama-di-indonesia-diresmikan)
.
There are generally some concerns among oil palm producers on the recently
introduced European Union Deforestation Regulation ("EUDR"). The regulation
bans imports into the EU of agricultural products that come from deforestation
and illegal sources with the aim of ensuring that products consumed within the
EU are not contributing to deforestation or forest degradation anywhere in the
world since 2020. It applies to several commodities which includes palm oil
whereby producers and traders of these commodities have to carry out due
diligence throughout their supply chains before being allowed to trade these
products in the EU market. In Indonesia, there are fears that this regulation
will disproportionately affect oil palm smallholder and farmers which account
for a significant share of the country's total palm oil production. This
regulation is not expected to have any effect on AEP as we have adopted the No
Deforestation, No Peat and No Exploitation ("NDPE") policy since mid-2019.
AEP's plantations in Indonesia and Malaysia are in compliance with national
sustainable practices i.e. ISPO and MSPO. However, with the increasing
deforestation regulations, especially from the EU, the Board has decided that
it is timely in 2024 to start the process of applying for membership of the
Roundtable on Sustainable Palm Oil ("RSPO"). This is AEP's commitment to a
more robust and globally accepted certification for certified sustainable palm
oil, which would address concerns over EUDR and other sustainability issues.
AEP has this year begun the RSPO membership application process, and has
appointed accredited consultants to carry out a Land Use Change Analysis
("LUCA") as a first step in the application procedure. The LUCA will cover
satellite mapping, field verifications, interviews with stakeholders and
surrounding communities to determine potential High Conservation Value ("HCV")
and High Carbon Stock ("HCS") areas for restoration and remediation. Upon the
completion of LUCA and successful application for RSPO membership, AEP will
begin certifying all our facilities within a 5-year timeline. A preliminary
study on RSPO gap analysis conducted by our external consultants indicated it
will take a substantial amount of costs and resources, up to $18 million, to
certify the entire Group and be a full member of RSPO.
Following on, I am pleased to present the operating results of the Group for
the year ended 31 December 2023.
The Group's fresh fruit bunches ("FFB") production from continuing operations
in 2023 reached 1.10 million mt, 2% lower than last year of 1.12 million mt,
mainly due to the replanting of ageing trees. Regionally, the crop production
in Bengkulu registered a sharp decline of 17% as 2,260 ha of old palms had
been replanted over the last two years. will continue in 2024 with over
2,100 ha planned, of which 700 ha will be in North Sumatera and over 1,400 ha
will be in the Bengkulu region. The application of fertilizers for trees
earmarked for replanting is normally reduced and gradually stopped two years
prior to replanting which also explains a drop in yield. Production in
Kalimantan however improved by 14% as more palms reached maturity and the
average bunch weight increased.
With bountiful supply of external crops from May to October 2023, FFB bought
from surrounding smallholders and plasma reached 1.08 million mt, similar to
2022. However, our mill in Riau experienced a significant drop of 17% in
external crop purchases as competition from small millers heats up. The number
of small millers in the vicinity of where our Riau mill is situated has
increased significantly over the last two years as record crude palm oil
("CPO") prices in 2022 encouraged entry of independent millers relying solely
on external crops for their mill operations. Farmers enjoy better returns as
small millers impose minimal or no discount on crops that are contaminated
with dirt, excessive moisture, underripe or overripe fruits. The farmers also
save on logistical costs as small millers are normally located nearer to them.
Our MPM mill on the other hand bought 19% more external crops in 2023,
compared to 2022, as the region experienced lower rainfall easing
transportation of crops. Our mills processed a combined 2.16 million mt of
FFB, 2% lower than last year of 2.21 million mt. CPO production was 1% lower
at 449,000 mt, compared to 455,600 mt in 2022, compensated by the improved oil
extraction rate ("OER") of 20.84% against 20.59% in 2022. Kernal production
for 2023 stood at 103,900 mt, 2% lower than last year of 106,200 mt.
After achieving record CPO prices in 2022, prices for 2023 have been trending
lower. Despite the regional conflicts in Eastern Europe and the Middle East,
production of soft oil remains high resulting in a glut of soyabean and
sunflower oil, the main competitors of palm oil. The weaker export and
sluggish demand from China continued to be a damper for CPO. Average CPO price
ex-Rotterdam for the year was therefore 29% lower at $971/mt, compared to
$1,369/mt in 2022. A more detailed explanation is provided in the Strategic
Report under Commodity Prices.
The Group's revenue from continuing operations was $371.0 million, 17% lower
compared to $447.6 million in 2022, principally due to the lower CPO price in
2023. The operating profit for the Group from continuing operations in 2023,
before biological asset ("BA") movement, was lower at $70.6 million, from
$132.9 million reported in 2022. The earnings per share, before BA movement
from continuing operations, decreased by 47% to 130.24cts, from 245.25cts in
2022. The Group's operating profit after BA movement from continuing
operations for 2023 was at $69.7 million after a downward BA movement of $0.9
million as compared to 2022 operating profit of $127.1 million after a
downward BA movement of $5.8 million.
The Group's new planting for oil palm including plasma for 2023 totalled 775
ha compared to 952 ha last year. The new planting was mostly in the Kalimantan
region, where land compensation was concluded more efficiently. Replanting of
some 1,074 ha of oil palms in Bengkulu was accelerated during the year to
replace trees with poor yield. 227 ha was also replanted in North Sumatera.
The Group plans to plant 3,000 ha of oil palm in 2024, which includes
replanting of 2,100 ha in Bengkulu and North Sumatera. Plasma planting for
2024 is estimated at 270 ha. It is the intention of the Group to replant 2% to
3% of our trees each year to maintain a heathy age profile of the palms. This
will also help to improve yield per planted hectare and OER to counter the
rising cost of production.
The Group sold 22,900 MWh of surplus electricity from its biogas plants in
2023 compared to 23,900 MWh last year. The plants trap and purify biogas
emission consisting mainly of methane from the palm oil mill effluent ("POME")
and use it as fuel to generate green electricity. Methane has a higher
heat-trapping potential than carbon dioxide and cutting its emission can have
a positive impact on reining in global warming. The revenue from the sale of
surplus electricity to the national grid in 2023 was $1.08 million (2022:
$1.16 million). Constant tripping of transmission lines in the Bengkulu
region, together with shutting of the plants for maintenance and downward
revision of rates sold to national grid were the reasons for the poor
performance in 2023. Further investment in biogas plants in Indonesia is
dependent on regional demand for electricity.
The Company launched a share buyback programme in August 2023 to repurchase up
to 396,360 ordinary shares representing approximately 1% of the Ordinary
Shares in issue. A sum of £3.2 million has been allocated for the share
buyback programme. At the close of the financial year, the Company had
purchased 75,926 Ordinary Shares at a cost of £0.55 million with an average
price of £7.15 per Ordinary Share, and as at 23 April 2024 the Company had
purchased a total of 100,430 Ordinary Shares at a total cost of £0.7 million
at an average of 713p. Treasury Shares now stands at a total of 440,330
Ordinary Shares. The aim of a share buyback programme is to return some
surplus cash to its shareholders with a view to enhancing shareholder value.
However, the number of shares bought back to date is very much less than the
Board had expected, principally due to the lack of liquidity in AEP's shares.
With this in mind the share buyback programme will not be extended beyond its
expiry date of the next AGM on 24 June 2024.
In determining the level of dividends to be paid to our shareholders, the
Board has taken a balanced approach to the requirement of funds in the Company
for expansion in planted area as well acquisitions of land or plantations, but
at the same time cognisant of shareholders' wishes to have dividends as a form
of income. In light of the results achieved in the year, the Board has
declared a final dividend of 15.0 cts per share, in line with our reporting
currency, in respect of the year up to 31 December 2023. With an interim
dividend of 15cts per share already paid, the total dividend declared for the
year ended 31 December 2023 will be 30.0 cts (2022: 25.0 cts), equivalent to
approximately 25% of the retained profits attributable to the Group for the
year ended 31 December 2023. Going forward the Company has adopted a policy of
declaring at least 25% of the retained profits attributed to the Group
annually.
In the absence of any specific instructions up to the date of closing of the
register on 14 June 2024, shareholders with addresses in the UK will be deemed
to have elected to receive their dividends in Pounds Sterling and those with
addresses outside of UK will be deemed to have elected to receive their
dividends in US Dollars. Subject to the approval by shareholders at the AGM,
the final dividend will be paid on 12 July 2024 to those shareholders on the
register on 14 June 2024.
Proposed Companies Act Ratification
The Board has become aware of an issue concerning technical compliance with
the Companies Act 2006 (the "Act"). The Act provides that a public company
may, amongst other things, pay a dividend or purchase its own shares out of
its distributable profits as shown in either the last accounts circulated to
members or, if interim accounts are used for these purposes, interim accounts
that have been filed at Companies House, which enable a reasonable judgment to
be made of the profits, losses, assets, liabilities, share capital and
revenues. Such interim accounts must have been filed at Companies House even
if the company in question has sufficient distributable profits at the
relevant time.
This issue arose because, whilst the Company had sufficient distributable
profits at all relevant times, interim accounts had not been filed at
Companies House prior to the declaration of the final dividend in respect of
the year ended 31 December 2022 or the interim dividend in respect of the year
ended 31 December 2023, together with the series of shares bought back from
August 2023 to date following the announcement of the Share Buyback programme,
notwithstanding that the shares bought back remained in Treasury and not
cancelled. It is intended that this technical issue be ratified by a
shareholder resolution, as is customary in these circumstances. Accordingly,
the relevant resolution, together with explanations, will be put to
shareholders at a general meeting of the Company.
If the shareholder resolution is passed, this will give the Board the
necessary authorities to enter into the required waivers which will put all
potentially affected recipient shareholders and the Company in the position in
which they were always intended to be had the relevant actions been made in
accordance with the Act, insofar as practically possible.
Neither the technical issue nor the proposed ratification has any impact on
the Company's financial position.
On behalf of the Board of Directors, I would like to convey our sincere thanks
to our management and employees of the Group for their dedication, loyalty,
resourcefulness, commitment and contribution to the Group.
I would also like to take this opportunity to thank shareholders, business
associates, government authorities and all other stakeholders for their
continued confidence, understanding and support for the Group.
Mr. Jonathan Law Ngee Song
Chairman
30 April 2024
Strategic Report
Introduction
The Strategic Report has been prepared to provide shareholders with
information to complement the financial statements. This report may contain
forward-looking statements, which have been included by the Board in good
faith based on information available up to the time of approval of this
report. Such statements should be treated with caution going forward given the
uncertainties inherent with the economic and business risks faced by the
Group.
Business Model
The Group will continue to focus on its strength and expertise, which is
planting more oil palms sustainably and production of CPO. This includes
replanting low-yielding aging palms, replacing old rubber trees with palm
trees and building more mills to process the FFB. The Group has, over the
years, created value to shareholders through expansion in a responsible
manner.
The Group remains committed to use its available resources to develop the land
bank in Indonesia, together with acquisition of profitable plantations at
strategic locations, as regulatory constraints permit. The Indonesian
government has, in recent years, passed laws to prioritise domestic
investments and to limit foreign direct investments over national interest,
including a limit of 20,000 ha per province and a national total of 100,000 ha
on the licensed development of oil palms for companies that are not listed in
Indonesia or with less than a majority local ownership.
The Group recognises the importance of its workforce which needs to be
rewarded with a fair compensation scheme based on performance, and a safe and
a comfortable workplace, together with good accommodation facilities and other
social benefits where necessary. At the same time, the Board actively promotes
AEP's culture based on the value of integrity, teamwork and excellence. The
culture is instilled throughout the workforce, including training on areas
such as anti-bribery and corruption, modern slavery and an administered
whistle blowing channel. The Group dismisses staff proven to have breached the
value of integrity.
The Group's objectives are to provide returns to investors in the long-term
from its operations as well as through the expansion of the Group's business,
to foster economic progress in localities of the Group's activities and to
develop the Group's operations in accordance with the best corporate social
responsibility and sustainability standards.
We believe that sustainable success for the Group is best achieved by acting
in the long-term interests of our shareholders, our partners and society.
Our Strategy
One of the Group's objectives is to provide an appropriate level of return to
the investors and to enhance shareholder value. Profitability, to a large
extent, correlated to the CPO price, which is volatile and determined by
supply and demand as well as the weather. The Group believes in the long-term
viability of palm oil as it can be produced more economically than other
competing oils and remains the most productive source of vegetable oil in a
growing population. Soybean crops would require up to ten times as much land
to produce an equivalent weight of palm oil. It has been reported that one
hectare of land can produce up to 4 mt of CPO, much higher than rapeseed of
0.7 mt, sunflowers of 0.6 mt or even soybeans of 0.4 mt. In this regard, palm
oil is far more sustainable than other edible vegetable oils. In addition, oil
palm has a long and productive biological life of 25 years compared to yearly
planting for other soft oils.
The Group's strategies, therefore, focus on maximising yield per hectare above
22 mt/ha, minimum mill production efficiency of 110%, minimising production
costs below $300/mt and streamlining estate management. For the year under
review, the overall Indonesian continuing operations achieved a FFB yield of
20.2 mt/ha, 131% mill efficiency and production cost for our own crops of
$354/mt as compared to a FFB yield of 20.6 mt/ha, 136% mill efficiency and a
production cost of $349/mt in 2022. Despite stiff competition for external
crops from surrounding millers, the Group is committed to purchasing more
external crops from third parties at competitive, yet fair prices, to maximise
the production efficiency of the mills. With higher throughput, the mills
would achieve economies of scale in production. A mill is deemed to achieve
100% mill efficiency when it operates 16 hours a day for 300 days per annum.
In line with the commitment to reduce its carbon footprint, the Group plans to
construct, in stages, biogas and/or BioCNG plants at all its mills. The biogas
plants trap methane being the main gas emitted from the anaerobic treatment of
palm mill effluents. The biogas produced is used to drive biogas engines to
generate electricity to power its boilers which in turn reduces the
consumption of fossil fuel. Surplus electricity generated is sold to the
national grid. In a BioCNG plant, the methane captured is purified from 55% to
96% and compressed into cylinders for industrial use. With more industrial use
of BioCNG, the consumption of fossil fuel is expected to reduce and
progressively reduce the greenhouse gas emissions per metric ton of CPO
produced in the next few years. Depending on the demand for BioCNG, the Group
intends to use Empty Fruit Bunch ("EFB") as a feedstock to increase the BioCNG
production. EFB is a biomass left after the palm fruitlets have been stripped
for production of CPO. This is an opportunity to turn biomass waste into
revenue. It is commonly accepted that failure to address growing calls to
reduce greenhouse gas emissions could threaten the long-term social
acceptability and profitability of a palm oil company. The Group has also
set metrics and targets to lower greenhouse gas emissions over time as
detailed in the Decarbonisation modelling and high-level target setting.
The Group will continue to engage and offer competitive and fair compensation
to the villagers so that land can be cleared and be planted.
Non-financial and Sustainability Information Statement
The Group has complied with the requirements of Section 414CB of the Companies
Act 2006 by providing a wide range of non-financial information about
employees, environmental and social matters in the table below and in our
website:
Non-financial matter Policies and standards which govern our approach
Business model Business model and strategy
Principal risks and uncertainties
Environmental matters Principal risks and uncertainties: Country, regulatory and governance
practices
Principal risks and uncertainties: Weather and Environmental and conservation
practices
Indonesian Sustainable Palm
Oil
Environmental, Social and Governance practices
Climate-related financial disclosures
- Management of Climate Risks
· Climate and nature-related risks and opportunities
· Climate & Nature Scenario Analysis
- Decarbonisation modelling and high-level target setting
- Carbon Reporting
Corporate Governance: Environmental and corporate responsibility
Other responsible agricultural practices and sustainable policies can be found
on our website
Employees and Employees: Employment policies
Health & Safety Directors' Remuneration Report: Employees engagement
Workers are protected from exposure to occupational health and safety hazards
that are likely to pose immediate risk of permanent injury, illness or
fatality. Proper signages are in place at relevant spots to alert employees of
safety. Workshops and training sessions on occupational safety and health care
are regularly conducted.
Social matters Principal risks and uncertainties: Covid-19 and other contagious diseases
AEP has established clear policies and strict protocols for the control and
prevention of the spread of Covid-19 and other contagious diseases within the
workplace environment. There are requirements for mask wearing, social
distancing, when necessary, and sanitising of the workplace regularly. AEP
also has strict procedures on testing at work and self-isolation of its
employees when necessary, together with home support for the affected ones to
ensure full recovery before they resumed work.
Respect for human rights AEP has clear policies of no exploitation of its employees, including
complying with paying minimum wage. It does not practise child or forced
labour in line with the Modern Slavery Statement referred to on its website.
In addition, a whistle blowing policy is in place to allow any employee to
raise concerns about unethical, illegal or questionable practices, in full
confidence, without the risk of reprisal.
Anti-corruption and anti-bribery matters Anti-corruption and anti-bribery policies and procedures.
Financial Review
Performance of the business during the year
For the year ended 31 December 2023, the revenue for the Group from continuing
operation was $371.0 million, 17% lower than $447.6 million reported in 2022
due primarily to the lower production and lower CPO prices.
The Group's operating profit from continuing operation for 2023, before
biological asset movement, was $70.6 million, 47% lower than last year of
$132.9 million. The lower operating profit was due to lower production, lower
CPO prices and higher operational costs. Transport costs and wages in
particular rose sharply during the year.
FFB production for continuing operations for 2023 reached 1.10 million mt, 2%
lower than the 1.12 million mt produced in 2022. The yield for continuing
operations from Indonesian plantations was lower at 20.2 mt/ha (2022: 20.6
mt/ha) due to lower crop production in Bengkulu and Riau plantations.
FFB bought-in from local smallholders and plasma in 2023 remain at 1.08
million mt (2022: 1.08 million mt). Our mills processed a combined 2.16
million mt of FFB, 2% lower than last year of 2.21 million mt. CPO production
was 1% lower at 449,000 mt, compared to 455,600 mt in 2022, compensated by the
improved OER of 20.84% against 20.59% in 2022. Kernel production for 2023
stood at 103,900 mt, 2% lower than last year of 106,200 mt.
Profit before tax and after BA movement from continuing operation for the
Group was $77.8 million, 41% lower compared to a profit of $132.9 million in
2022. The BA movement was a debit of $0.9 million, compared to a debit of $5.8
million in 2022. The debit BA movement was mainly due to the lower FFB price
at 31 December 2023. Net finance income recognised in the income statement
increased from $4.9 million in 2022 to $8.0 million in 2023 due to higher
deposits income, without interest expense. The tax expenses for 2022 was
reduced by the recognition of deferred tax assets amounting to $11.2 million
arising from the losses from the disposal of the South Sumatera plantations
which can be utilised as a deductible expense against future profits in the
Group.
The total gain on the discontinued operations was $6.6 million (2022: $5.8
million), made up of operating loss of $2.5 million (2022: $0.8 million) and
reclassification of exchange reserve of $10.4 million. With the sale price of
$8.5 million, there was a further write down of $1.4 million of the three
plantations in South Sumatera in 2023, due to strength of the Indonesian
Rupiah.
The average CPO price ex-Rotterdam for 2023 was $971/mt, 29% lower than 2022
of $1,369/mt. The ex-mill price for 2023 averaged $721/mt, 15% lower than last
year of $845/mt.
Earnings per share before BA movement from continuing operations decreased by
47% to 130.24cts compared to 245.25cts in 2022. Earnings per share after BA
movement from continuing operations decreased from 235.74cts to 128.82cts.
Earnings per share have decreased mainly due to the decrease in profit after
tax.
There was a gain of exchange in translation of foreign operations, recognised
in other comprehensive income, totalling $10.2 million for 2023 against an
exchange loss of $55.7 million in the previous year due to the strengthening
of the Indonesian rupiah at the year end. The retirement benefits due to the
employees at 31 December 2023, as calculated by a third-party actuary,
increased to $11.3 million from $10.9 million last year due to additional
accrual during the year.
Position of the business at the end of the year
The Group's statement of financial position remains strong, with a cash and
cash equivalents balance including short-term investments (see Note v) of
$167.1 million and no external borrowing at the end of 2023. All material
changes in statement of financial position and cash flows are listed in the
following table:
Note (restated)
31.12.2023 31.12.2022
$000 $000
Property, plant and equipment i 274,382 252,414
Deferred tax assets ii 11,054 12,773
Income tax liabilities iii (2,951) (10,230)
Cash and cash equivalents v, vi, vii 152,984 221,476
Short-term investments v,vi, vii 14,076 55,566
Assets in disposal groups classified as held for sale iv - 9,000
Net cash generated from operating activities v 31,855 120,511
Purchase of property, plant and equipment (33,421) (34,026)
Net cash used in financing activities vii (115,934) (9,523)
i. The increase in property, plant and equipment from $252.4 million in 2022
to $274.4 million was the result of replanting activities, together with the
gain in exchange in translation.
ii. The movement in deferred tax assets was due to the utilisation of the
brought forward tax losses against the profit of two subsidiaries.
iii. The income tax liabilities are lower principally as a result of higher
tax payment in 2023. A detailed explanation of income tax, including other
taxes, is provided in note 8.
iv. The assets in disposal groups were finally sold in 2023 with a further
write down of $1.4 million in 2023.
v. As at 31 December 2023, the Group had cash and cash equivalents of $153.0
million (2022: $221.5 million) and short-term investments known as fixed
deposits of $14.1 million (2022: $55.6 million). The cash position, including
fixed deposits, was lower in 2023 principally due to the buying out of
minority interests in Indonesia at $87.8 million, together with the allocation
of $4.2 million for the share buyback programme and an investment of $10.0
million in structured products. The net cash inflow from operating activities
during the year was lower by 74% at $31.9 million compared to $120.5 million
in 2022, mainly due to the lower profit for the year.
vi. The net cash used in financing activities during the year was higher at
$115.9 million compared to $9.5 million in 2022 due to the acquisition of
non-controlling interests during the year and the higher dividend paid.
Viability Statement
The viability assessment considers solvency and liquidity over a longer period
than for the purposes of the going concern assessment made. Inevitably, the
degree of certainty reduces over a longer period.
The Group's business activities, financial performance, corporate development
and principal risks associated with the local operating environment are
covered under the various sections of this strategic report. In undertaking
the review of the Group's performance in 2023, the Board considered the
prospects of the Company, focusing on the strategy for growth via the
expansion of its planted area in tandem with forecasting demand for CPO, over
one to five-year periods. The process involved a detailed review of the 2024
detailed budget and the five-year income and cash flow projection. The
one-year budget has a greater level of certainty and is used to set detailed
budgetary targets at all levels across the Group. It is also used by the
Remuneration Committee to set targets for the annual incentive. The five-year
income and cash flow projection contains less certainty of the outcome but
provides a robust planning tool against which strategic decisions can be made.
The Board believes that to project beyond five years has more elements of
uncertainties and therefore less reliable for making informed decisions.
The Board also considered the five-year cash flow projection under various
severe but plausible scenarios, including the financial impact on the Group
from 50% contraction of demand for palm oil resulting from the Coronavirus
pandemic or any other contagious diseases, as outlined in the Strategic Report
under Going Concern, and the need to support if any financially loss-making
newly matured estates, together with the projected capital expenditure. The
Group also factored in the impact of the price increase of materials and
fertilisers. In arriving at the conclusion that the Group has adequate
resources to continue in operation and meet its liabilities in the next five
years, the Board has assumed a worst-case scenario of CPO price at its lowest
average of $500/mt and that demand for CPO dropped by 50%, together with a
significant rise in cost of materials arising from the disruption of supply
chains. The assumptions applied are linked to risk of CPO price fluctuation,
risk of a substitute for oil palm and a pandemic from an infectious disease.
On this basis and other matters considered and reviewed by the Board during
the year, the Board has a reasonable expectation that the Group has adequate
resources to continue in operation and meet its liabilities over the five
years from 2024 to 2028.
Going Concern
The Directors have carried out stress tests, factoring in the identified
uncertainties and risks such as commodity prices and demands post pandemic,
together with the current economic issues of high inflation, rising interest
rates and cost of living crisis, to ensure that the Group has adequate
resources in a worst-case scenario to remain as a going concern for at least
twelve months from the date of this report.
The Directors have a reasonable expectation, having made the appropriate
enquiries, that the Group has sufficient cash resources to cover the Group's
operating expenses for a period of at least twelve months from the date of
approval of these financial statements. For these reasons, the Directors
adopted a going concern basis in the preparation of the financial statements.
The Directors have made this assessment after consideration of the Group's
budgeted cash flows and related assumptions including appropriate stress
testing of identified uncertainties, as well as impact when demand on palm oil
decrease to 50%. Stress testing of other identified uncertainties and risks
such as CPO prices and currency exchange rates were also undertaken.
Business Review
Indonesia
The performance of the Indonesian operations was divided into six geographical
regions.
North Sumatera
FFB production in North Sumatera, which aggregates the estates of Tasik, Anak
Tasik, Labuhan Bilik ("HPP"), Blankahan, Rambung, Sg Musam and Cahaya Pelita
("CPA") produced 408,900 mt in 2023 about 4% lower than last year (2022:
423,900 mt). Rainfall was normal. 227ha was replanted in Musam and CPA in 2023
with more areas earmarked for replanting in 2024. The withdrawal of
fertilizers for areas meant for replanting means that these areas will most
likely have lower yields. Palm losses at HPP was high due to the outbreak of
Ganoderma affecting 10% of the trees limiting any potential yield upside.
Quick replanting of dead palms ensures a steady high palm density in HPP which
currently averaged 145 stand per hectare. Sub-optimal nutrient retention and
absorption caused by peat soil is another factor for low bunch weight at HPP.
The average annual yield for 2023 in North Sumatera decreased by 2% to 22.3
mt/ha from the previous year of 22.8 mt/ha. Although yield continued to drop
in Blankahan, replanting is temporary deferred as the yield is still above 24
mt/ha due to good soil condition.
In 2023, the three mills in North Sumatera produced marginally higher CPO at
150,100 mt (2022:148,100 mt) from a throughput of 724,800 mt (2022: 738,400
mt). The Blankahan mill with lower internal and external crops purchases
processed 5% less fruits in 2023 at 232,700 mt (2022: 244,500 mt), lowering
the mill utilisation to 121% from 127% in the previous year. The OER in
Blankahan was low due mainly to dura contamination from external crops that
made almost 70% of the total crop processed, but marginally improved in 2023
to 19.1% (2022 18.9%). Dura crops with thinner mesocarp normally have an oil
content of 18% or lower. The Tasik mill processed 3% marginally lower crops at
479,300 mt (2022: 493,900 mt). Although the external crop purchases increased
by 7% to 154,200 mt from 144,700 mt in the previous year, it could not make up
for the drop in internal crops production, reducing mill utilisation from 171%
in 2022 to 166% in 2023. OER for the Tasik mill improved to 21.5% (2022:
20.6%) as new planting matured. The new HPP mill started processing small
batches of in-house crops intermittently in the last quarter of 2023 as a test
run. In total, it processed 12,800 mt of FFB in 2023, achieving OER of 21.6%.
Commercial operation has started in January 2024 after the bacteria cultivated
in the anaerobic effluent treatment plant has sufficiently build up before the
whole effluent system is fully functional.
The biogas plant in Blankahan in North Sumatera did not perform up to its true
potential in 2023, due to the lack of demand from the National Grid, together
with the reduction in selling price. The Blankahan plant sold about 6,500 MWh
(2022: 6,500 MWh) of surplus electricity, similar to 2022 but generated 4%
less revenue of $339,000 (2022: $354,100). The Group has converted Blankahan
biogas plant into a BioCNG plant, which next year is expected to generate
better returns from sale of methane gas together with a share of carbon credit
sold. However, the Tasik biogas plant was not able to sell the surplus
electricity to the national grid due to the lack of demand in North and
Central Sumatera. The Group has signed an agreement with KIS to convert the
Tasik biogas plant to a BioCNG plant and is currently awaiting approvals from
the relevant authorities.
The three plantations in North Sumatera where the cultivation rights ("HGU")
were due to expire were extended by the Indonesian government from 25 to 35
years.
Bengkulu
FFB production in Bengkulu, which aggregates the estates of Puding Mas ("MPM")
and Alno produced 223,800 mt (2022: 269,500 mt), 17% lower than 2022 mainly
due to the reduction of matured palms as a result of replanting. As a result,
matured areas were smaller by 8% in 2023 at 13,204 ha from 14,382 ha. Rainfall
was lower in 2023 at 2,870 mm (2022: 3,600 mm) with three consecutive months
where rainfall averaged below 65 mm per month in the second half of 2023.
Tractors with attached water tank trailers were used to water newly planted
trees to minimise damages from the drought. With replanting, the stand per
hectare have improved to 111 stand per hectare from slightly below 100. The
yield, however, was lower at 16.4 mt/ha from 18.1 mt/ha last year due to the
replanting and the drought.
MPM and Sumindo mills processed a combined 633,900 mt (2022: 668,500 mt) of
FFB in 2023, 5% lower than 2022 due to lower internal crop production as
explained above. Even though external crop purchases increased by 8% to
394,600 mt from 365,500 mt last year, the mill utilisation was lower at 110%
from 116% in the previous year. CPO production for the year was 4% lower at
129,900 mt (2022: 136,000 mt) with OER for the two mills averaged 20.5%
compared to 20.3% last year. We expect further improvement in OER when the oil
recovery plant, which was installed at MPM mill, is fully functional. The oil
recovery plant is still at a testing stage at the time of reporting. External
crops made up 62% of the throughput compared to 55% in 2022. The remaining
processed crop was purchased from other group companies.
1,074 ha of palms in Bengkulu were replanted in 2023 with new generation
planting materials. Dura palms formed a significant portion of the planted
areas in Bengkulu. Fruits from dura palms have thin mesocarp which ultimately
produce less oil hence 4,370 ha of palms would need to be replanted due to
poor yield, notwithstanding that they are 16 to 18 years of age. Seedlings are
sourced from reputable suppliers to ensure only Tenera palms are cultivated,
hence significantly increasing productivity and land use efficiency. This is
especially important considering that the oil palm is a perennial crop with a
25-year economic lifespan.
The MPM biogas plant sold over 8,000 MWh (2022: 10,500 MWh) of surplus
electricity in 2023, 24% lower and generated $350,000 in revenue (2022:
$474,700). The frequent tripping of the old regional power transmission lines
supplying electricity to the national grid had caused frequent breakdowns in
power generation at the biogas plant. The power rate was also reduced by 0.5%
in 2023.
Riau
FFB production in the Riau region, comprising Bina Pitri estates, produced
123,000 mt in 2023 (2022: 135,000 mt), 9% lower than 2022. Monthly rainfalls
were close to normal at 2,730 mm (2022: 2,480 mm). The yield for the year was
lower at 25.6 mt/ha from last year of 28.0 mt/ha. As 79% of the palms are
between the ages of 26 to 29 years, and with a declining yield, replanting is
planned for 2025.
The mill purchased 17% lower external crop in 2023 at 222,600 mt compared to
268,000 mt last year, reducing the mill utilisation rate to 120% from 140%
last year. The competition for external crops in Riau is extremely keen as
many mini mills entered the market in early 2022 attracted by high CPO prices.
Overall the CPO production was 15% lower at 65,300 mt compared to 77,200 mt in
2022. The region is contaminated by dura palms which made up 64% (2022: 66%)
of the crops processed by the mill. The mill therefore had a lower OER of
18.9% from 19.2% in the previous year.
Bangka
FFB production in the Bangka region, comprising Bangka Malindo Lestari
estates, produced 21,100 mt in 2023 (2022: 12,900 mt), 64% higher than 2022.
The higher crop was due to a larger harvestable area and more palms having
reached peak maturity. Rainfall was below optimum averaging 1,643 mm in the
year with four months where rainfall fell between 26 mm to 95 mm per month
compared to the average of 1,835 mm previous year. The yield increased
slightly from 12.1 mt/ha to 12.3 mt/ha in 2023. The average age of palms is 5
years. With new planting in 2023 totalling 104 ha (2022: 63 ha), the total
planted area, including plasma, in Bangka reached 3,203 ha (2022: 3,099 ha).
We plan to plant another 150 ha in 2024.
Kalimantan
FFB production in Kalimantan which comprises the Sawit Graha Manunggal ("SGM")
and Kahayan Agro Plantation ("KAP") estates was 312,800 mt in 2023 (2022:
273,800 mt), 14% higher than 2022. During the year, 519 ha of palms matured in
SGM and KAP leading to its first harvest. Production in Kalimantan was higher
due to a larger harvestable area as more palms reached maturity. The breeding
and releasing weevils to help with pollination has reduced the extent of
abnormal fruit bunches reported in the previous year. The average bunch weight
was nevertheless below industrial standard due to the sandy soil at SGM but
made up by the yield due to higher stand per hectare. The stand per hectare in
SGM and KAP plantations averaged 145 stand and 125 stand per hectare
respectively. The yield in Kalimantan increased to 20.4 mt/ha from 18.4 mt/ha
last year. Rainfall in KAP was lower at 4,009 mm (2022: 4,794 mm) while at
SGM, it was also lower at 2,043 mm (2022: 2,438 mm).
New planting in SGM and KAP is expected to reach 460 ha next year. The
long-term prospect for Kalimantan plantations remains bright.
The purchase of external and plasma crops in SGM reached 147,100 mt in 2023
which was higher by 11% compared to 132,200 mt last year. The total external
and plasma crops at the SGM mill made up 33% of the total crops processed
similar to last year. With the throughput at the mill reaching 450,700 mt
(2022: 402,400 mt), the mill utilisation rate increased to 156% from 140%
producing 103,700 mt of CPO, 10% higher than 2022 of 94,300 mt. OER for the
mill averaged 23.0% for the year compared to 23.4% last year and continues to
outperform the rest of the mills in the Group.
The SGM biogas plant generated 22% more electricity in 2023 at over 8,400 MWh
(2022: 6,900 MWh) worth $391,900 (2022: $331,000). The higher power generation
was due to shorter downtime as there was no major overhaul of gas engine in
2023. Due to the continuous high demand for electricity in Kalimantan region,
the mill is planning to add another gas engine in 2024. This is in line with
the Indonesian government's objective of achieving renewal energy at 23% of
total energy consumption compared to current rate of 3%.
South Sumatera - discontinued operations
FFB production in South Sumatera, which aggregates the estates of Karya
Kencana ("KKST"), Empat Lawang ("ELAP") and Riau Agrindo ("RAA") produced
21,600 mt (2022: 46,300 mt), 53% lower than 2022. The Group had concluded the
sale of the South Sumatera plantations in 2023. The operation was handed over
fully to the new owners in September 2023 and the Group has no further control
of the plantations since then.
Overall bought-in crops for the Indonesian operations in 2023, including
plasma, were in line with last year at 1.08 million mt. The average OER for
our mills was marginally higher at 20.8% in 2023 (2022: 20.6%).
Malaysia
FFB production in 2023 was 34% higher at 12,500 mt, compared to 9,300 mt in
2022. With the temporary lifting of employment restriction, the plantation was
able to recruit additional foreign workers. However, retention of foreign
workers is challenging because of competition and more lucrative offers from
other industries. Experienced harvesters are normally required in our
plantation when matured trees are as tall as a 7-storey building. The
plantation therefore continued to experience a substantial shortage of workers
which hampered not only field maintenance and application of fertilisers but
harvesting, resulting in crop losses. Not many locals are prepared to work in
plantations despite offering higher wages. The palms, with an average age of
26 years, faced declining yield. The stand per hectare further reduced due to
the damages caused by wild elephants. The Malaysian plantation generated a
loss before tax after BA movement of $0.2 million in 2023, compared to a
profit before tax after BA movement of $0.3 million in 2022.
The financial performance of the various regions is reported in note 6 on
segmental information.
Commodity Prices
CPO prices for 2023 was relatively flat compared to the downward price trend
in 2022.
The CPO price ex-Rotterdam started the year at a high at $1,060/mt (2022:
$1,350/mt). It hit a high of $1,100/mt in January before trending downwards to
a low of $860/mt in late May 2023. It recovered somewhat to end the year at
$945/mt. Ex-Rotterdam price averaged $971/mt for the year, 29% lower than last
year (2022: $1,369/mt). Our average ex-mill price for 2023 was at $721/mt, 15%
lower than last year of $845/mt. Ex-mill prices are lower than ex-Rotterdam
prices due to logistic, insurance costs, Indonesian levies and taxes.
The regional conflicts and wars, together with the cost-of-living crisis and
the lingering effects of the Covid-19 pandemic have created economic
uncertainty which has impacted heavily on the global economy.
The weak global economy, the glut of competing vegetable oils and oversupply
of soybeans from South America and soft demand from key importers like India
and China have made it challenging for palm oil in 2023.
In 2023 producers in Ukraine aggressively sold and export their sunflower oil
which increased significantly over the previous year, with EU as the main
buyers despite the on-going conflicts and logistical disruptions. Sunflower
oil is finding its way to EU through land and river Danube given the risks of
shipment through the Black Sea grain corridor. With Brazil already producing
massive amounts of soybeans annually, it was also reported their farmers are
expected to plant more soybeans in the next crop season, switching from corn.
Producers find corn prices unattractive relative to soybeans. A majority of
the soybeans produced is destined for the China market, the second largest
consumer of CPO. Unless the consumption of vegetable oils in China picks up
strongly, a weaker demand for CPO is expected.
Like other commodities, the prices of competing soft oils relative to CPO
price is a key to demand. With the abundance of soft oils, the CPO discount to
sunflower and soya-oil have narrowed significantly and therefore CPO has lost
its attractiveness particularly for markets that are sensitive to prices.
In the coming months, CPO prices are expected to be volatile due to the
effects of El Niño on crop production, especially in the second of 2024,
together with the higher uptake of CPO in Indonesia because of the National
biodiesel mandate.
Over a period of ten years, CPO price has touched a monthly average low of
$472/mt in November 2018 and a monthly average high of $1,857/mt in March
2022. The monthly average price over the ten years was about $828/mt.
Rubber prices averaged $1,297/mt for 2023 (2022: $1,431/mt), 9% lower in 2023.
Our small area of 258 ha of mature rubber contributed a revenue of $0.5
million in 2023 (2022: $0.6 million). With the continuing low prices for
rubber, it has been decided to replace the rubber with oil palm in 2024.
Estate Development
In 2023, the Group opened up new land and planted 775 ha (2022: 952 ha) of oil
palm mainly in Kalimantan and Bangka. With the disposal of the South Sumatera
plantations, planted area including the smallholder cooperative scheme, known
as Plasma, reduced by 9% to 68,948 ha (2022: 76,095 ha). Another 1,301 ha was
replanted in North Sumatera and Bengkulu. In 2024, the Group plans to plant
3,000 ha of oil palm which includes replanting of 2,120 ha in North Sumatera
and Bengkulu. Opening of new land for planting can be cumbersome and requires
written approval from local authorities, submission of environment impact
assessments and meetings with local communities. All new plantings are carried
out following the High Carbon Stock Approach ("HCSA") guidelines and are
verified by accredited consultants.
Throughout the plantations, old quarters for workers were progressively
modernised in 2023 at a cost of $2.3 million. Another $3.1 million is budgeted
for 2024 for renovations and refurbishments to provide better comfort for
workers. Following our discussion with the relevant authorities to speed up
electrification of remote locations, where our plantations are located, the
Group spent $156,400 to connect 288 houses with electricity. In 2024, $1.5
million is allocated to provide electricity to more than a thousand homes.
The construction of the seventh mill in HPP, North Sumatera was finally
completed in the fourth quarter of 2023 at a cost of $22.5 million following a
lengthy delay caused by the unfortunate explosion of one of the anaerobic
tanks during construction which resulted in work having to be suspended,
pending the completion of an investigation and clearance from the authorities
before work can be resumed. The contractor has compensated the families of the
deceased and the families have waived any future claim against AEP. The mill
has started processing small batches of in-house crops to test various
equipment. The start-up of the effluent treatment plant requires controlled
feeding of small amount of palm oil mill effluent ("POME") to cultivate the
anaerobic bacteria in the anaerobic tank digesters. When the effluent
treatment plant is fully operational, the mill will go into full production
including intake of external FFBs. The effluent treatment in HPP is unique
compared to the other mills as lagoons to hold the effluents are not permitted
in HPP due to the risks of contamination by seepage of effluents into ground
water. Effluents are therefore stored in tanks which need better treatment and
control due to limited storage capacity.
The Environmental Impact Assessment ("EIA") for the proposed new mill in KAP
in Kalimantan has been completed and submitted to the Ministry for Environment
and Forestry for approval. The process for approval can be tedious and likely
to take some time due to strict new regulations issued by the Indonesian
government. We are following up with the relevant authorities and making every
effort to speed up the approval so that earthworks can begin. The earthworks
will be substantial and costly involving levelling terrain to create flat
areas for the site. The KAP estate is located in a very hilly area with deep
ravines and the choice of sites for the mill is limited. The mill, with a
planned capacity of 45 mt/hr will be sufficient to process all the crops from
KAP plantation. The mill is projected to start in the first half of 2024 at a
cost $15.3 million.
During the year, the Group purchased 23 units of dump trucks costing $713,000
to improve transportation and delivery of FFB in our plantations as well as to
the mills. An additional sum of $377,000 has been allocated in 2024 for the
same purpose. This is necessary amidst rising logistic cost as independent
transport companies especially in Kalimantan and Bengkulu cannot supply
adequate trucks to transport our harvest as many trucks especially in
Kalimantan are diverted to carry coal which pay better transport rates. In
addition, the Group spent $1.2 million to improve the field roads and
connectivity between estates and mills by building new bridges. The Group has
budgeted to spend a further $3.1 million in 2024 to improve and maintain our
roads for better connectivity.
In Bina Pitri mill, three old and worn-out vertical sterilisers/pressure
vessels have been replaced with better designed units requiring new
foundations. The fourth unit in Bina Pitri mill is being replaced in the
second quarter of 2024. The total cost of replacement will be in the region of
$600,000. In Sumindo mill, four units of old sterilizers were completely
replaced at a cost of $510,000.
In 2023, SGM mill processed in excess of 450,000 mt of FFB. Additional
features were added to ensure the smooth running of the milling process
without disruption. The sterilizer station will be extended with two
additional units of vertical sterilizers complete with FFB feeding and
discharge conveyors at a cost of $750,000 on top of four existing units. The
project is expected to be completed by the second quarter of 2024. An
additional oil storage tank with a capacity of 4,000 mt was added at a cost of
$275,000 in addition to the present four units to increase storage capacity to
17,000 mt. This is to ensure that SGM has sufficient storage in the event of
delays in the collection by tanker ships caused by bad weather.
At Tasik mill, the railway tracks and the marshalling system for the cages
were upgraded at a cost of $200,000. In the coming year, Tasik mill will
install a new boiler with superheaters of 45,000 kg/hr at an estimate cost of
$1.2 million.
The corroded roofings and structures to both factory buildings in MPM and Bina
Pitri mills were replaced for $370,000. MPM mill also spent reconstruction
cost of $150,000 to fix a hill slope next to the mill, damaged by landslide
during heavy rainfall in 2023. One unit of horizontal sterilizer was replaced
at MPM mill costing $145,000 while another boiler is currently being
refurbished and upgraded by adding superheaters to enhance its performance at
a cost of $350,000, to be completed by the second quarter of 2024.
The oil recovery system installed at MPM mill is having some problems and is
only partially operating. While the decanter is operating well to remove some
of the solids in the sludge, the membrane system chokes frequently during
operation. The contractor will introduce a high-speed separator to improve the
performance.
Two of our mills namely SGM and HPP, which use river barges to transport their
CPO, are required by the government authorities to build their own jetties.
The mills currently use government owned jetties and the Group can only use
them on a temporary basis as they are meant for public use. Jetties are used
to connect the shore and deep water for the purpose of docking of river barge
to facilitate loading of CPO. The Group is targeting to acquire suitable land
next to the rivers to construct two jetties in 2024 which is expected to cost
$1.7 million.
On behalf of the Board
Dato' John Lim Ewe Chuan
Executive Director
30 April 2024
Directors' Responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with UK adopted international accounting
standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the Group
financial statements in accordance with UK adopted International Accounting
Standards ("IAS") and have elected to prepare the company financial statements
in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law) ("UK GAAP"). Under
company law, the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss for the Group for that
period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with UK adopted
international accounting standards, subject to any material departures
disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and the Company will continue in
business; and
· prepare a Directors' Report, a Strategic Report and Directors'
Remuneration Report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the group's performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with the legislation in the UK
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Directors' responsibilities pursuant to Disclosure and Transparency Rules 4
("DTR4")
The Directors confirm to the best of their knowledge:
· The financial statements have been prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the Group.
· The annual report includes a fair review of the development and
performance of the business and the financial position of the Group and
Company, together with a description of the principal risks and uncertainties
that they face.
On behalf of the Board
Dato' John Lim Ewe Chuan
Executive
Director
30 April 2024
Consolidated Income Statement
For the year ended 31 December 2023
(Restated)
2023 2022(#)
Result before Result before
BA movement* BA movement*
BA movement BA movement
Note Total Total
$000 $000 $000 $000 $000 $000
Continuing operations
Revenue 3 370,962 - 370,962 447,619 - 447,619
Cost of sales (291,553) (875) (292,428) (304,424) (5,792) (310,216)
Gross profit 79,409 (875) 78,534 143,195 (5,792) 137,403
Administration expenses (8,867) - (8,867) (10,293) - (10,293)
Gain / (loss) arising from fair value 30 45 - 45 (7) - (7)
Operating profit 70,587 (875) 69,712 132,895 (5,792) 127,103
Exchange gains 164 - 164 991 - 991
Finance income 4 7,977 - 7,977 4,859 - 4,859
Finance expense 4 (45) - (45) (12) - (12)
Profit before tax 5 78,683 (875) 77,808 138,733 (5,792) 132,941
Tax expense 8 (20,364) 194 (20,170) (21,054) 1,276 (19,778)
Profit for the year from continuing operations 58,319 (681) 57,638 117,679 (4,516) 113,163
Gain / (Loss) on discontinued operations, net of tax 9 6,611 (87) 6,524 (5,684) (139) (5,823)
64,930 (768) 64,162 111,995 (4,655) 107,340
Profit for the year attributable to:
- Owners of the parent 55,414 (644) 54,770 92,820 (3,904) 88,916
- Non-controlling interests 9,516 (124) 9,392 19,175 (751) 18,424
64,930 (768) 64,162 111,995 (4,655) 107,340
Profit for the year from continuing operations attributable to:
- Owners of the parent 51,524 (561) 50,963 97,209 (3,772) 93,437
- Non-controlling interests 6,795 (120) 6,675 20,470 (744) 19,726
58,319 (681) 57,638 117,679 (4,516) 113,163
Earnings per share attributable to the owners of the parent during the year
Profit
- basic and diluted 10 138.44cts 224.33cts
Profit from continuing operations
- basic and diluted 10 128.82cts 235.74cts
* The column represents the IFRS figures and the result before BA movement.
This Alternative Performance Measure ("APM") reflects the Group's results
before the movement in fair value of biological assets been applied. We have
opted to additionally disclose APM as management do not use the fair value of
BA movement in assessing business performance.
(#) The details of prior year restatement are disclosed in note 32.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(Restated)
2023 2022(#)
$000 $000
Profit for the year 64,162 107,340
Other comprehensive income / (expenses):
Items may be reclassified to profit or loss:
Profit / (loss) on exchange translation of foreign operations 10,182 (55,659)
Recycling of foreign exchange on disposal (10,431) -
Net other comprehensive income / (expenses) may be reclassified to profit or (249) (55,659)
loss
Items not to be reclassified to profit or loss:
Remeasurement of retirement benefits plan, net of tax (375) 177
Net other comprehensive (expenses) / income not being reclassified to profit (375) 177
or loss
Total other comprehensive income / (expenses) for the year, net of tax (642) (55,482)
Total comprehensive income for the year 63,538 51,858
Total comprehensive income for the year attributable to:
- Owners of the parent 54,850 43,072
- Non-controlling interests 8,958 8,786
63,538 51,858
( )
(#) The details of prior year restatement are disclosed in note 32.
Consolidated Statement of Financial Position
As at 31 December 2023
Company Number: 1884630
Note (Restated)
31.12.2023 31.12.2022(#)
$000 $000
Non-current assets
Property, plant and equipment 12 274,382 252,414
Investments 30 10,035 42
Receivables 13 20,306 18,963
Deferred tax assets 14 11,054 12,773
315,777 284,192
Current assets
Inventories 15 16,684 19,590
Income tax receivables 8 19,169 4,122
Other tax receivable 8 40,575 37,576
Biological assets 16 5,419 6,161
Trade and other receivables 17 10,689 3,468
Short-term investments 18 14,076 55,566
Cash and cash equivalents 18 152,984 221,476
259,596 347,959
Assets in disposal groups classified as held for sale 9 - 9,000
259,596 356,959
Current liabilities
Trade and other payables 19 (27,456) (33,966)
Income tax liabilities 8 (2,951) (10,230)
Other tax liabilities 8 (1,184) (1,221)
Dividend payables (41) (32)
Lease liabilities 20 (300) (73)
(31,932) (45,522)
Net current assets 227,664 311,437
Non-current liabilities
Deferred tax liabilities 14 (762) (747)
Retirement benefits - net liabilities 21 (11,298) (10,874)
Lease liabilities 20 (709) (31)
(12,769) (11,652)
Net assets 530,672 583,977
Issued capital and reserves attributable to owners of the parent
Share capital 22 15,504 15,504
Treasury shares 22 (1,847) (1,171)
Share premium 23,935 23,935
Capital redemption reserve 1,087 1,087
Exchange reserves (341,639) (289,434)
Retained earnings 826,656 722,191
523,696 472,112
Non-controlling interests 6,976 111,865
Total equity 530,672 583,977
(#) The details of prior year restatement are disclosed in note 32.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Note Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Total Non-controlling interests Total equity
$000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 31 December 2021 15,504 (1,171) 23,935 1,087 (241,907) 642,582 440,030 102,078 542,108
Items of other comprehensive (expenses) / income
-Remeasurement of retirement benefit plan, net of tax 21 - - - - - 144 144 33 177
-Loss on exchange translation of foreign operations - - - - (45,988) - (45,988) (9,671) (55,659)
Total other comprehensive (expenses) / income - - - - (45,988) 144 (45,844) (9,638) (55,482)
Profit for the year - - - - - 88,916 88,916 18,424 107,340
Total comprehensive (expenses) / income for the year - - - - (45,988) 89,060 43,072 8,786 51,858
Acquisition of non-controlling interests 31 - - - - (1,539) (7,469) (9,008) 3,175 (5,833)
Dividends paid - - - - - (1,982) (1,982) (2,174) (4,156)
Balance at 31 December 2022 15,504 (1,171) 23,935 1,087 (289,434) 722,191 472,112 111,865 583,977
Items of other comprehensive income / (expenses)
-Remeasurement of retirement benefit plan, net of tax 21 - - - - - (374) (374) (1) (375)
- Recycling of foreign exchange on disposal (8,307) - (8,307) (2,124) (10,431)
-Gain on exchange translation of foreign operations - - - - 8,491 - 8,491 1,691 10,182
Total other comprehensive income / (expenses) - - - - 184 (374) (190) (434) (624)
Profit for the year - - - - - 54,770 54,770 9,392 64,162
Total comprehensive income for the year - - - - 184 54,396 54,580 8,958 63,538
Acquisition of non-controlling interests 31 - - - - (52,389) 65,923 13,534 (101,342) (87,808)
Share buy back - (676) - - - - (676) - (676)
Dividends paid - - - - - (15,854) (15,854) (12,505) (28,359)
Balance at 31 December 2023 15,504 (1,847) 23,935 1,087 (341,639) 826,656 523,696 6,976 530,672
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
2023 2022
Note $000 $000
Cash flows from operating activities
Profit before tax from continuing operations 77,808 132,941
Adjustments for:
BA movement 875 5,792
Gain on disposal of property, plant and equipment (49) (91)
Depreciation 16,400 16,724
Retirement benefit provisions 2,581 1,157
Net finance income (7,932) (4,847)
Unrealised gain in foreign exchange (164) (991)
(Gain) / loss arising from fair value (45) 7
Property, plant and equipment written off 191 134
Impairment losses 35 617
Provision for expected credit loss 331 1,665
Operating cash flows before changes in working capital 90,031 153,108
Decrease / (Increase) in inventories 3,405 (6,291)
Increase in non-current, trade and other receivables (8,520) (896)
(Decrease) / Increase in trade and other payables (6,939) 4,028
Cash inflows from operations 77,977 149,949
Retirement benefits paid (1,206) (612)
Overseas tax paid (43,108) (27,495)
Operating cash flows from continuing operations 33,663 121,842
Operating cash flows used in discontinued operations (1,808) (1,331)
Net cash generated from operating activities 31,855 120,511
Investing activities
Property, plant and equipment
- purchases (33,421) (34,026)
- sales 315 111
Interest received 7,977 4,859
Increase in receivables from cooperatives under plasma scheme (4,894) (4,513)
Repayment from cooperatives under plasma scheme 1,921 1,943
Investment in investment portfolio (9,948) -
Disposal of subsidiaries 8,500 -
Placement of fixed deposits with original maturity of more than three months (14,076) (55,566)
Withdrawal of fixed deposits with original maturity of more than three months 55,566 1,439
Cash generated from / (used in) investing activities from continuing 11,940 (85,753)
operations
Cash used in investing activities from discontinued operations (1,786) (1,865)
Net cash generated from / (used in) investing activities 10,154 (87,618)
Financing activities
Dividends paid to the holders of the parent (15,845) (1,975)
Dividends paid to non-controlling interests (12,505) (2,174)
Repayment of lease liabilities - principal (243) (220)
Repayment of lease liabilities - interest (45) (12)
Acquisition of non-controlling interests (86,620) (5,142)
Share buy back (676) -
Cash used in financing activities from continuing operations (115,934) (9,523)
Cash used in financing activities from discontinued operations - -
Net cash used in financing activities (115,934) (9,523)
Net (decrease) / increase in cash and cash equivalents (73,925) 23,370
Cash and cash equivalents
At beginning of year 221,476 218,249
Exchange gains / (losses) 5,433 (20,143)
At end of year 152,984 221,476
Comprising:
Cash at end of year 18 152,984 221,476
Notes
1 Basis of preparation
AEP is a company incorporated in the UK under the Companies Act 2006 and is
listed on the London Stock Exchange. The registered office of AEP is located
at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, UK. The
principal activity of the Group is plantation agriculture, mainly in the
cultivation of oil palm in Indonesia and Malaysia, of which Indonesia is the
principal place of business.
The financial information does not constitute the company's statutory accounts
for the years ended 31 December 2023 or 2022. Statutory accounts for the years
ended 31 December 2023 and 31 December 2022 have been reported on by the
Independent Auditor. The Independent Auditor's Reports on the Annual Report
and Financial Statements for the years ended 31 December 2023 and 31 December
2022 were unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Statutory accounts for the year ended 31 December 2022 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2023 will be delivered to the Registrar in due course.
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all years presented.
Basis of preparation
The consolidated financial statements have been prepared in accordance with UK
adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The consolidated financial statements have been prepared on a historical cost
basis, except for the following items:
• Biological assets (note 16)
• Retirement benefits (note 21)
• Investments (note 30)
The Directors have carried out stress tests, factoring in the identified
uncertainties and risks such as commodity prices and demands post pandemic,
together with the current economic issues of high inflation, rising interest
rates and cost of living crisis, to ensure that the Group has adequate
resources in a worst-case scenario to remain as a going concern for at least
twelve months from the date of this report.
The Directors have a reasonable expectation, having made the appropriate
enquiries, that the Group has sufficient cash resources to cover the Group's
operating expenses for a period of at least twelve months from the date of
approval of these financial statements. For these reasons, the Directors
adopted a going concern basis in the preparation of the financial statements.
The Directors have made this assessment after consideration of the Group's
budgeted cash flows and related assumptions including appropriate stress
testing of identified uncertainties, specifically on the potential shut down
of the entire operations from three to twelve months if all the plantations
are infected with an infectious disease as well as the impact on the demand
for palm oil with decreases of 50%. Stress testing of other identified
uncertainties and risks such as commodity prices and currency exchange rates
were also undertaken.
Changes in accounting standards
(a) New standards, interpretations and amendments effective for the
first time for the accounting periods beginning on or after 1 January 2023 in
these financial statements in the current year
• IFRS 17 Insurance Contracts
• IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2, amendment related to Disclosure of Accounting Policies
• IAS 8 Accounting policies, Changes in Accounting Estimates
and Errors, amendment related to Definition of Accounting Estimates
• IAS 12 Income Taxes, amendment related to International Tax
Reform - Pillar Two Model Rules
(b) New standards, interpretations and amendments not yet effective.
The following new standards, interpretations and amendments are effective for
future periods (as indicated) and have not been applied in these financial
statements:
• IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures, amendment related to Supplier Finance Arrangements
(1 January 2024, not yet adopted).
• IFRS 16 Leases, amendment related to Lease Liability in a
Sale and Leaseback (1 January 2024, not yet adopted)
• IAS 1 Presentation of Financial Statements, amendment
related to Classification of Liabilities as Current or Non-Current (1 January
2024, not yet adopted).
• IAS 1 Presentation of Financial Statements, amendment
related to Non-current Liabilities with Covenants (1 January 2024, not yet
adopted).
• IAS 21 The Effects of Changes in Foreign Exchange Rates,
amendment related to Lack of Exchangeability (1 January 2025, not yet
adopted).
None of the above new standards, interpretations and amendments are expected
to have a material effect on the Group's future financial statements.
2 Accounting policies
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. The Company controls a subsidiary if all three of
the following elements are present; power over the subsidiary, exposure to
variable returns from the subsidiary, and the ability of the investor to use
its power to affect those variable returns. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date control ceases. In respect of
cooperatives under the Plasma scheme, the Group has not consolidated these
results on the basis that all key decisions are made by the cooperative and
the Company has no voting rights therefore does not have control over those
entities.
(b) Business combinations
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. Acquisitions of entities that comprise principally land with
no active plantation business do not represent business combinations, in such
cases, the amount paid for each acquisition is allocated between the
identifiable assets/liabilities at the acquisition date.
(c) Foreign currency
The individual financial statements of each subsidiary are presented in the
currency of the country in which it operates (its functional currency), being
the currency in which the majority of their transactions are denominated, with
the exception of the Company and its UK subsidiaries which are presented in US
Dollar. The presentation currency for the consolidated financial statements is
also US Dollar, chosen because, as internationally traded commodities, the
price of the bulk of the Group's products are ultimately linked to the US
Dollar.
On consolidation, the results of overseas operations are translated into US
Dollar at average exchange rates for the year unless exchange rates fluctuate
significantly in which case the actual rate is used. All assets and
liabilities of overseas operations are translated at the rate ruling at the
balance sheet date. Exchange differences arising on re-translating the opening
net assets at opening rate and the results of overseas operations at actual
rate are recognised directly in equity (the "exchange reserves"). Exchange
differences recognised in the income statement of Group entities' separate
financial statements on the translation of long-term monetary items forming
part of the Group's net investment in the overseas operation concerned are
reclassified to the exchange reserves if the item is denominated in the
presentational currency of the Group or of the overseas operation concerned.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the exchange reserves relating to that operation up to the date
of disposal are transferred to the income statement as part of the profit or
loss on disposal.
All other exchange profits or losses are credited or charged to the income
statement.
(d) Revenue recognition
The Group derives its revenue from the sale of CPO, palm kernel, FFB, shell
nut, biomass products, biogas products and rubber slab. Revenue for CPO, palm
kernel, FFB, shell nut, biomass and biogas products are recorded net of sales,
including export taxes and recognised when the customer has taken delivery of
the goods. The collection/delivery of the goods will not take place until the
goods are paid for. Sales of rubber slab are recognised on signing of the
sales contract, this being the point at which control is transferred to the
buyer.
The transacted price for each product is based on the market price or
predetermined monthly contract value. There is no right of return nor warranty
provided to the customers on the sale of products and services rendered.
Advance receipts represent the Group's obligation to transfer goods to a
customer for which the Group has received consideration but the goods have yet
to be delivered to/collected by the customer.
(e) Tax
UK and foreign corporation tax are provided at amounts expected to be paid or
recovered using the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.
The directors consider that the carrying amount of tax receivables
approximates its fair value.
(f) Dividends
Equity dividends are recognised when they become legally payable. The Company
may pay an interim dividend each year. The final dividend becomes legally
payable when approved by the shareholders at the next annual general meeting.
(g) Property, plant and equipment
Plantations comprise of the cost of planting and development of oil palm and
other plantation crops. Costs of new planting and development of plantation
crops are capitalised from the stage of land clearing up to the stage of
maturity. The costs of immature plantations consist mainly of the accumulated
cost of land clearing, planting, fertilising and maintaining the plantation
and other indirect overhead costs up to the time the trees are harvestable and
to the extent appropriate. Oil palm plantations are considered mature within
three to four years after planting and generating average annual CPO of four
to six metric tons per hectare. Immature plantations are not depreciated.
The Indonesian authorities have granted certain land exploitation rights and
operating permits for the estates. The land rights are usually renewed without
significant cost subject to compliance with the laws and regulations of
Indonesia therefore, the Group has classified the land rights as leasehold
land. The leasehold land is recognised at cost initially and is not
depreciated except the leasehold land in Malaysia which is depreciated over
the term of the lease as its renewal cannot be guaranteed. Costs include the
initial cost of obtaining the location permits and subsequent payments to
compensate existing land owners plus any legal costs incurred to acquire the
necessary land exploitation rights.
Construction in progress is stated at cost. The accumulated costs will be
reclassified to the appropriate class of assets when construction is completed
and the asset is ready for its intended use. Construction in progress is also
not depreciated until such time when the asset is available for use.
Plantations, buildings and oil mills are depreciated using the straight-line
method. The yearly rates of depreciation are as follows:
Leasehold land in Malaysia - over the term of the lease
Plantations - 5% per annum
Buildings - 5% to 10% per annum
Oil Mill - 5% per annum
Estate plant, equipment & vehicle - 12.5% to 50% per annum
Office plant, equipment & vehicle - 25% to 50% per annum
(h) Leases
Land rights are recognised at historical cost without depreciation at the
balance sheet date except for leasehold land in Malaysia where it is
recognised at historical cost and depreciated over the term of the lease.
(i) Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. In the case of processed produce for sale which
comprises palm oil and kernel, cost represents the monthly weighted-average
cost of production and appropriate production overheads. Estate and mill
consumables are valued on a weighted average cost basis. Fresh fruit bunches
are measured on initial recognition at fair value less costs to sell at the
point of harvest, as this is considered to reflect its cost at that date.
(j) Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss
Investments which are held for strategic gain are carried in the statement of
financial position at fair value with changes in fair value recognised in the
consolidated statement of income statement in gain or loss arising from fair
value.
Amortised cost
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the consolidated statement
of financial position. All the Group's receivables and loans are
non-derivative financial assets with cash flows that are solely payments of
principal and interest. They are recognised at fair value at inception and
subsequently at amortised cost as this is what the Group considers to be most
representative of the business model for these assets.
Cash and cash equivalents consist of cash in hand and short-term deposits at
banks with an original maturity not exceeding three months. Bank overdrafts
are shown within loans and borrowings under current liabilities on the
statement of financial position.
The Group considers a trade receivable or other receivable as credit impaired
when one or more events that have a detrimental impact on the estimated cash
flow have occurred. Trade and other receivables are written off when there is
no expectation of recovery based on the assessment performed. If the
receivables are subsequently recovered, these are recognised in income
statement.
The Group use three categories for those receivables which reflect their
credit risk and how the loss provision is determined for those categories.
These include trade receivables using the simplified approach and debt
instruments at amortised costs other than trade receivables and financial
guarantee contracts using the three-stage approach.
(k) Financial liabilities
All the Group's financial liabilities are non-derivative financial
liabilities.
Trade and other payables are shown at fair value at recognition and
subsequently at amortised cost.
(l) Deferred tax
The Group recognises deferred tax liabilities arising from taxable temporary
differences on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary differences and it is probable that the
temporary difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it
is possible that taxable profit will be available against which the difference
can be utilised.
(m) Retirement benefits
Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the
consolidated income statement in the year to which they relate.
Defined benefit schemes
The Group operates a number of defined benefit schemes in respect of its
Indonesian operations. The schemes' surpluses and deficits are measured at:
• The fair value of plan assets at the reporting date; less
• Plan liabilities calculated using the projected unit credit method
discounted to its present value using yields available on Indonesian
Government bonds that have maturity dates approximating to the terms of the
liabilities; plus
• Past service costs; less
• The effect of minimum funding requirements agreed with scheme
trustees.
Remeasurements of the net defined benefit obligation are recognised in other
comprehensive income. The remeasurements include:
• Actuarial gains and losses;
• Return on plan assets (interest exclusive); and
• Any asset ceiling effects (interest inclusive).
Service costs are recognised in the income statement and include current and
past service costs as well as gains and losses on curtailments.
Net interest expense / (income) is recognised in the income statement, and is
calculated by applying the discount rate used to measure the defined benefit
obligation / (asset) at the beginning of the annual period to the balance of
the net defined benefit obligation / (asset), considering the effects of
contributions and benefit payments during the period.
Gains or losses arising from changes to scheme benefits or scheme curtailment
are recognised immediately in the income statement. Settlements of defined
benefit schemes are recognised in the period in which the settlement occurs.
(n) Financial guarantee contracts
Where the Company and its subsidiaries enter into financial guarantee
contracts and guarantee the indebtedness of other companies within the Group
and/or third party entities, these are accounted for under IFRS 9. The details
of financial guarantee contracts are disclosed in note 26.
(o) Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Judgements
• Assessment of de-facto control of cooperatives under Plasma
scheme (see note 2(a) and note 28).
• Classification of land as leasehold with no depreciation
charged (see note 12).
• Classification of assets as held for sale and discontinued
operations (see note 9).
• Expected credit losses ("ECL") on amounts due from
cooperatives under Plasma scheme - determination of possible outcomes and
their weighted probability (see note 13).
• Carrying value of income tax receivables - determination of
historic recovery rates (see note 8).
• Income taxes and deferred tax - provisions for income taxes in
various jurisdictions (see note 8 and note 14).
• Recognition of deferred tax on losses - estimate of future
profitability of respective entities (see note 14).
Estimates and assumptions
• Impairment of plantation assets - determination of the
discount rate and other assumptions (see note 12).
• Valuation of biological assets - oil content of FFB (note 16)
• Retirement benefits - actuarial assumptions (see note 21).
Fair value measurement - a number of assets and liabilities included in the
Group's financial statements require measurement at, and/or disclosure of,
fair value. The fair value measurement of the Group's financial and
non-financial assets and liabilities utilises market observable inputs and
data as far as possible. Inputs used in determining fair value measurements
are categorised into different levels based on how observable the inputs used
in the valuation technique utilised are (the 'fair value hierarchy'):
- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- Level 2 - inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly or
indirectly; and
- Level 3 - unobservable inputs for the asset or liability.
The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised in
the period they occur.
The Group measures the following assets at fair value:
- Biological assets (note 16).
- Investment (note 30).
The Group measures the following assets at amortised cost, however disclosure
of fair value is given in accordance with IFRS7 and IFRS 13:
- Non-current receivables due from non-controlling interests (note
13).
- Non-current receivables due from cooperatives under Plasma
scheme (note 13).
For more detailed information in relation to the fair value measurement of the
items above, please refer to the applicable notes.
3 Revenue
Disaggregation of Revenue
The Group has disaggregated revenue into various categories in the following
table which is intended to:
• depict how the nature, amount and uncertainty of revenue and cash
flows are affected by timing of revenue recognition; and
• enable users to understand the relationship with revenue segment
information provided in note 6.
There is no right of return and warranty provided to the customers on the sale
of products and services rendered. All revenue in the table below is
recognised at a point in time.
CPO, palm kernel and FFB Shell nut Biomass products Biogas products Total
Year to 31 December 2023 Rubber Others
$000 $000 $000 $000 $000 $000 $000
Contract counterparties
Government - - - - 1,081 - 1,081
Non-government
- Wholesalers 363,967 529 4,844 - - 541 369,881
363,967 529 4,844 - 1,081 541 370,962
Timing of transfer of goods
Delivery to customer premises 6,784 529 - - - - 7,313
Delivery to port of departure - - - - - - -
Customer collect from our mills / estates
357,183 - 4,844 - - - 362,027
Upon generation / others - - - - 1,081 541 1,622
363,967 529 4,844 - 1,081 541 370,962
Year to 31 December 2022
Contract counterparties
Government - - - - 1,160 - 1,160
Non-government
- Wholesalers 437,247 630 5,438 24 - 3,120 446,459
437,247 630 5,438 24 1,160 3,120 447,619
Timing of transfer of goods
Delivery to customer premises 5,359 630 - - - - 5,989
Delivery to port of departure - - - 24 - - 24
Customer collect from our mills / estates
431,888 - 5,438 - - - 437,326
Upon generation / others - - - - 1,160 3,120 4,280
437,247 630 5,438 24 1,160 3,120 447,619
4 Finance income and expense
2023 2022
$000 $000
Finance income
Interest receivable on:
Credit bank balances and time deposits 7,977 4,859
Finance expense
Interest payable on:
Interest expense on lease liabilities (note 20) (45) (12)
Net finance income recognised in income statement 7,932 4,847
5 Expenses by nature
2023 2022
$000 $000
Expenses by nature:
Purchase of FFB 160,692 182,715
Depreciation (note 12):
- continuing operations 16,400 16,724
- discontinued operations - -
16,400 16,724
Impairment losses (note 12):
- continuing operations 35 617
- discontinued operations - -
35 617
Impairment loss on adjustments to fair value of assets held for sale 1,376 5,034
Provision / (Reversal) for expected credit loss (note 17):
- continuing operations 331 1,665
- discontinued operations 7 (91)
338 1,574
Exchange gains (163) (994)
Legal and professional fees 1,426 1,289
Staff costs (note 7) 64,823 62,390
Remuneration received by the Group's auditor or associates of the Group's
auditor:
- Audit of parent company 5 5
- Audit of consolidated financial statements 299 205
- Audit related assurance service 10 9
- Audit of UK subsidiaries 13 13
Total audit services 327 232
Audit of overseas subsidiaries
- Malaysia 22 22
- Indonesia 152 147
Total audit services 174 169
Total auditor's remuneration 501 401
6 Segment information
Description of the types of products and services from which each reportable
segment derives its revenues
In the opinion of the Directors, the operations of the Group comprise one
class of business which is the cultivation of plantation in Indonesia and
Malaysia. From the cultivation of plantation, the Group produced the crude
palm oil and associated products such as palm kernel, shell nut, biomass
products, biogas products and rubber.
Factors that management used to identify reportable segments in the Group
The reportable segments in the Group are strategic business units based on the
geographical spread. Operating segments are consistent with the internal
reporting provided to the Board of Directors. The Board of Directors is
responsible for allocating resources and assessing the performance of the
operating segments. The Board decision is implemented by the Management
Committee, that is made up of a Group Chief Operating Officer and Group
Accountant in Malaysia, the President Director, the Chief Operating Officer,
Finance Director and the Engineering Director in Indonesia.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates segmental performance on the basis of profit or loss
before tax calculated in accordance with IFRS but excluding BA movement.
Inter-segment transactions are made based on terms mutually agreed by the
parties to maximise the utilisation of Group's resources at a rate acceptable
to local tax authorities. This policy was applied consistently throughout the
current and prior period.
The Group's assets are allocated to segments based on geographical location.
North Sumatera Bengkulu Riau Bangka Kalimantan Total Indonesia Malaysia UK Total from continuing operations South* Sumatera
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2023
Total sales revenue (all external)
- CPO, palm kernel and FFB 120,788 100,998 53,193 3,315 83,630 361,924 2,043 - 363,967 3,810
- Rubber 529 - - - - 529 - - 529 -
- Shell nut 2,013 1,299 1,479 - 53 4,844 - - 4,844 -
- Biomass products - - - - - - - - - -
- Biogas products 339 350 - - 392 1,081 - - 1,081 -
- Others 369 49 - 33 54 505 14 22 541 122
Total revenue 124,038 102,696 54,672 3,348 84,129 368,883 2,057 22 370,962 3,932
Profit / (loss) before tax 31,960 15,718 13,606 (95) 19,676 80,865 (896) (1,286) 78,683 (1,836)
BA movement (84) (355) (174) 5 (273) (881) 6 - (875) (111)
Profit / (loss) for the year before tax per consolidated income statement
31,876 15,363 13,432 (90) 19,403 79,984 (890) (1,286) 77,808 (1,947)
Interest income 4,392 2,358 1,106 1 47 7,904 69 4 7,977 3
Interest expense (26) - - - - (26) (11) (8) (45) -
Depreciation (5,139) (3,561) (854) (488) (6,131) (16,173) (203) (24) (16,400) -
Impairment losses - - - - - - (35) - (35) -
(Provision) / Reversal for expected credit loss (17) 57 - - (387) (347) - 16 (331) (7)
Inter-segment transactions (1,011) (2,310) (6,815) (358) 3,464 (7,030) 533 50 (6,447) 6,447
Inter-segmental revenue 33,790 5,296 - - 10,947 50,033 - - 50,033 2,716
Tax (expense) / credit (6,114) (2,619) (1,368) 68 (4,921) (14,954) 17 (5,233) (20,170) (584)
Total assets 231,839 107,389 51,568 18,951 149,629 559,376 10,519 5,478 575,373 -
Non-current assets 85,235 48,846 8,196 16,648 107,574 266,499 7,542 341 274,382 -
Non-current assets - additions 9,792 10,612 1,100 1,945 10,041 33,490 496 365 34,351 -
North Sumatera Bengkulu Riau Bangka Kalimantan Total Indonesia Malaysia UK Total from continuing operations South* Sumatera
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2022 (restated)
Total sales revenue (all external)
- CPO, palm kernel and FFB 146,044 124,480 77,688 2,554 84,198 434,964 2,283 - 437,247 9,192
- Rubber 630 - - - - 630 - - 630 -
- Shell nut 2,056 1,197 2,067 - 118 5,438 - - 5,438 -
- Biomass products 24 - - - - 24 - - 24 -
- Biogas products 354 475 - - 331 1,160 - - 1,160 -
- Others 141 - 2,662 33 264 3,100 20 - 3,120 114
Total revenue 149,249 126,152 82,417 2,587 84,911 445,316 2,303 - 447,619 9,306
Profit / (loss) before tax 51,210 35,809 26,166 433 29,079 142,697 (721) (3,243) 138,733 (1,105)
BA movement (1,845) (1,571) (846) (106) (1,354) (5,722) (70) - (5,792) (178)
Profit / (loss) for the year before tax per consolidated income statement
49,365 34,238 25,320 327 27,725 136,975 (791) (3,243) 132,941 (1,283)
Interest income 3,149 1,321 320 - 31 4,821 38 - 4,859 4
Interest expense (5) - - - - (5) (7) - (12) -
Depreciation (5,295) (3,942) (813) (374) (5,922) (16,346) (378) - (16,724) -
Impairment losses - - - - (185) (185) (432) - (617) -
(Provision) / Reversal for expected credit loss (169) (57) - - 12 (214) - (1,451) (1,665) 91
Inter-segment transactions 4,654 (1,927) (551) (291) (1,960) (75) 589 53 567 (567)
Inter-segmental revenue 44,080 2,711 - - 9,628 56,419 - - 56,419 7,305
Tax (expense) / credit (10,535) (7,262) 4,697 (26) (5,414) (18,540) (98) (1,140) (19,778) 494
Total assets 259,604 138,272 61,895 17,469 139,914 617,154 11,540 2,602 631,296 9,855
Non-current assets 79,119 41,193 7,820 14,901 101,780 244,813 7601 - 252,414 5,704
Non-current assets - additions 15,007 7,283 709 1,788 9,376 34,163 107 - 34,270 793
* South Sumatera represents the operations which have been discontinued and
have therefore been separated from the continuing operations. The details of
discontinued operations for South Sumatera are disclosed in note 9.
Below is an analysis of revenue from the Group's top 4 customers,
incorporating all those contributing greater than 10% of the Group's external
revenue in accordance with the requirements of IFRS 8. In year 2023, revenue
from top 4 customers of the Indonesian segment represents approximately
$194.2m (2022: $263.0m) of the Group's total revenue for continuing
operations. Although Customer 1 to 4 made up over 10% of the Group's total
revenue, there was no over reliance on these Customers as tenders were
performed on a weekly basis involving numerous other potential customers.
Three of the top four customers were the same as in the prior year.
North Sumatera Bengkulu Riau Bangka Kalimantan Total Indonesia Malaysia UK Total South Sumatera
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2023
Customer 1 - 15,001 25,203 - 24,565 64,769 - - 64,769 -
Customer 2 - 53,607 - - - 53,607 - - 53,607 -
Customer 3 41,735 1,362 - - - 43,097 - - 43,097 -
Customer 4 32,738 - - - - 32,738 - - 32,738 -
74,473 69,970 25,203 - 24,565 194,211 - - 194,211 -
2022
Customer 1 8,694 46,280 30,750 - 60,630 146,354 - - 146,354 -
Customer 2 51,854 4,039 - - - 55,893 - - 55,893 -
Customer 3 - 33,151 - - - 33,151 - - 33,151 -
Customer 4 27,583 - - - - 27,583 - - 27,583 -
88,131 83,470 30,750 - 60,630 262,981 - - 262,981 -
% % % % % % % % % %
2023
Customer 1 - 4.0 6.8 - 6.6 17.4 - - 17.4 -
Customer 2 - 14.5 - - - 14.5 - - 14.5 -
Customer 3 11.3 0.4 - - - 11.7 - - 11.7 -
Customer 4 8.8 - - - - 8.8 - - 8.8 -
20.1 18.9 6.8 - 6.6 52.4 - - 52.4 -
2022
Customer 1 1.9 10.3 6.9 - 13.5 32.6 - - 32.6 -
Customer 2 11.6 0.9 - - - 12.5 - - 12.5 -
Customer 3 - 7.4 - - - 7.4 - - 7.4 -
Customer 4 6.2 - - - - 6.2 - - 6.2 -
19.7 18.6 6.9 - 13.5 58.7 - - 58.7 -
Save for a small amount of rubber, all the Group's operations are devoted to
oil palm. The Group's report is by geographical area, as each area tends to
have different agricultural conditions.
7 Employees' and Directors' remuneration
2023 2022
Number Number
Average numbers employed (primarily overseas) during the year:
- full time 7,515 7,873
- part-time field workers* 7,812 8,384
15,327 16,257
* Part-time field workers headcounts based on full time equivalent of 8 hours
per day are 5,156 (2022: 6,657).
2023 2022
$000 $000
Staff costs (including Directors and discontinued operations) comprise:
Wages and salaries 57,173 55,775
Social security costs 4,058 3,826
Retirement benefit costs
- United Kingdom - -
- Indonesia (note 21) 3,543 2,736
- Malaysia 49 53
64,823 62,390
2023 2022
$000 $000
Directors' emoluments 321 194
2023 2022
$000 $000
Remuneration expense for key management personnel comprise:
Short-term employee benefits 2,170 1,656
Post-employment benefits - -
2,170 1,656
The Executive Director, Non-Executive Directors and senior management (general
managers and above) are considered to be the key management personnel.
8 Tax expense
2023 (Restated)
$000 2022
$000
Foreign corporation tax - current year 17,760 29,727
Foreign corporation tax - prior year 308 7
Deferred tax adjustment - origination and reversal of temporary differences 2,049 (10,851)
(note 14)
Deferred tax - prior year (note 14) 53 895
Total tax charge for year 20,170 19,778
Corporation tax rate in Indonesia is at 22% (2022: 22%) whereas Malaysia is at
24% (2022: 24%). The standard rate of corporation tax in the UK for the
current year is 23.5% (2022: 19%). The Group's charge for the year differs
from the standard Indonesian rate of corporation tax as explained below:
2023 (Restated)
$000 2022
$000
Profit before tax from continuing operations 77,808 132,941
Profit before tax multiplied by standard rate of Indonesia corporation tax of 17,118 29,247
22% (2022: 22%)
Effects of:
Irrecoverable withholding tax 5,183 1,205
Group accounting adjustments not subject to tax (391) (11,920)
Expenses not allowable for tax 970 1,213
Deferred tax assets not recognised 84 69
Income not subject to tax (1,737) (1,063)
Under provision of prior year income tax 308 7
Utilisation of tax losses not previously recognised (1,418) 125
Under provision of prior year deferred tax 53 895
Total tax charge for year 20,170 19,778
The above reconciliation has been prepared by reference to the Indonesian tax
rate rather than the UK tax rate as, in accordance with IAS 12, this is the
applicable tax rate that provides the most meaningful information, given this
is the country in which the majority of tax arises.
The tax receivables represent the corporate income tax ("CIT") and value added
tax ("VAT") that have yet to be refunded by the Indonesia tax authority. The
tax receivables relating to CIT arose due to over payment of tax. The tax
receivables relating to VAT arose because the majority of the Groups' CPO was
sold to bonded zones which do not attract output VAT and thus the input VAT
incurred is claimable. Upon submission of a tax return (for CIT) or a request
letter (for VAT refund), a tax audit will be conducted by the tax authority
and whilst every effort is made to resolve this quickly, the process can
sometimes take more than 12 months.
The breakdown of the tax receivables and tax liabilities is as follows:
2023 2022
$000 $000
Tax Receivables
Income tax 19,169 4,122
Other taxes 40,575 37,576
59,744 41,698
Tax Liabilities
Income tax (2,951) (10,230)
Other taxes (1,184) (1,221)
(4,135) (11,451)
9 Assets held for sale and discontinued operations
PT Riau Agrindo Agung, PT Karya Kencana Sentosa Tiga and PT Empat Lawang Agro
Perkasa ("South Sumatera Plantations"), subsidiaries of the Group, had on 5
July 2023, completed the disposal of its entire 100% equity interest to Mrs
Lina (also known as Liena Efendy) and Miss Lenny Nurimba for a total cash
consideration of $8,500,000.
The entire operations of the disposal group are presented within the South
Sumatera operating segment disclosed in Note 7 and represent a separate
geographical area of operations. The activities for the financial year ended
31 December 2023 and 31 December 2022 have been classified as discontinued
operations in the consolidated income statement as a single line.
The post-tax loss on disposal of discontinued operations was determined as
follows:
2023 2022
Result before Result before
BA movement BA movement
BA movement BA movement
Total Total
Note
$000 $000 $000 $000 $000 $000
Discontinued operations
Revenue 6 3,932 - 3,932 9,306 - 9,306
Cost of sales (5,707) (111) (5,818) (10,389) (178) (10,567)
Gross loss (1,775) (111) (1,886) (1,083) (178) (1,261)
Administration expenses (56) - (56) (120) - (120)
Impairment loss 12 - - - - - -
(Provision) / Reversal for expected credit loss 17 (7) - (7) 91 - 91
Operating loss (1,838) (111) (1,949) (1,112) (178) (1,290)
Exchange (loss) / gains (1) - (1) 3 - 3
Finance income 3 - 3 4 - 4
Finance expense - - - - - -
Loss before tax 5 (1,836) (111) (1,947) (1,105) (178) (1,283)
Tax (expense) / credit (608) 24 (584) 455 39 494
Loss for the year from discontinued operations (2,444) (87) (2,531) (650) (139) (789)
Impairment loss on adjustment to fair value (1,376) - (1,376) (5,034) - (5,034)
Recycling of foreign exchange on disposal 10,431 - 10,431 - - -
6,611 (87) 6,524 (5,684) (139) (5,823)
Attributable to:
- Owners of the parent 3,890 (83) 3,807 (4,389) (132) (4,521)
- Non-controlling interests 2,721 (4) 2,717 (1,295) (7) (1,302)
6,611 (87) 6,524 (5,684) (139) (5,823)
Earnings per share attributable to the owners of the parent during the year
- Basic and diluted EPS before BA movement 9.83cts (11.07)cts
- Basic and diluted EPS after BA movement 9.62cts (11.41)cts
Statement of cash flows
The statement of cash flows includes the following amounts relating to
discontinued operations:
2023 2022
$000 $000
Operating activities (1,808) (1,332)
Investing activities (1,786) (1,865)
Financing activities - -
Net decrease in cash and cash equivalents from discontinued operations (3,594) (3,197)
The following major classes of assets relating to the discontinued operations
have been classified as held for sale in the consolidated statement of
financial position before their respective dates of disposal and on 31
December 2022:
2023 2022
$000 $000
Property, plant and equipment 26,017 25,512
Impairment loss on adjustment to fair value (26,017) (24,547)
Property, plant and equipment net of impairment losses - 965
Non-current receivables 5,763 4,128
Impairment loss on adjustment to fair value (230) -
Non-current receivables net of impairment losses 5,533 4,128
Deferred tax assets 2,821 3,306
Inventories 108 213
Income tax receivable 35 49
Biological assets - 107
Trade and other receivables 3 232
Exchange differences - -
Total assets held for sale 8,500 9,000
An accumulated impairment loss of $26,247,000 (2022: $24,547,000) on the
measurement of the disposal group to fair value less cost to sell has been
recognised and was included in discontinued operations. The difference of
impairment loss was due to exchange in translation and further impairment of
$1,376,000 in 2023 (2022: $5,034,000). The fair value is based on the actual
selling price. They are categorised as level 3 non-recurring fair value
measurements. The fair value measurement is based on the above items' highest
and best uses, which do not differ from their actual use.
Details of the assets, liabilities and net cashflow arising from the disposal
of the subsidiaries are as follows:
$000
Consideration received 8,500
Property, plant and equipment net of impairment losses -
Non-current receivables 5,533
Deferred tax assets 2,821
Inventories 108
Income tax receivable 35
Trade and other receivables 3
Net assets disposed 8,500
Gain before reclassification adjustment -
Recycling of foreign exchange on disposal 10,431
Gain on disposal of the subsidiaries 10,431
Consideration received 8,500
Less: cash and cash equivalent in the subsidiaries -
Net cash inflow from disposal of subsidiaries 8,500
10 Earnings per ordinary share ("EPS")
(Restated)
2023 2022
$000 $000
Total operations
Profit for the year attributable to owners of the Company before BA movement 55,414 92,820
BA movement (644) (3,904)
Earnings used in basic and diluted EPS 54,770 88,916
Continuing operations
Profit for the year attributable to owners of the Company before BA movement 51,524 97,209
BA movement (561) (3,772)
Earnings used in basic and diluted EPS 50,936 93,437
Discontinued operations
Loss for the year attributable to owners of the Company before BA movement 3,890 (4,389)
BA movement (83) (132)
Earnings used in basic and diluted EPS 3,807 (4,521)
Number Number
'000 '000
Weighted average number of shares in issue in the year
- used in basic EPS 39,560 39,636
- dilutive effect of outstanding share options - -
- used in diluted EPS 39,560 39,636
Total operations
- Basic and diluted EPS before BA movement 140.07cts 234.18cts
- Basic and diluted EPS after BA movement 138.44cts 224.33cts
Continuing operations
- Basic and diluted EPS before BA movement 130.24cts 245.25cts
- Basic and diluted EPS after BA movement 128.82cts 235.74cts
Discontinued operations
- Basic and diluted EPS before BA movement 9.83cts (11.07)cts
- Basic and diluted EPS after BA movement 9.62cts (11.41)cts
11 Dividends
2023 2022
$000 $000
Paid during the year
Final dividend of 25.0cts per ordinary share for the year ended 31 December
2022 (2021: 5.0cts)
9,909 1,982
Interim dividend of 15.0cts per ordinary share for the year ended 31 December
2023
5,945 -
Proposed final dividend of 15.0cts per ordinary share for the year ended 31
December 2023 (2022: 25.0cts)
5,930 9,909
The proposed dividend for 2023 is subject to shareholders' approval at the
forthcoming annual general meeting and has not been included as a liability in
these financial statements.
The final dividend of 25.0cts in respect of the year ended 31 December 2022
and the interim dividend of 15.0cts in respect of the year ended 31 December
2023, both paid in 2023, were paid not in accordance with the Companies Act
2006 as the required interim accounts were not filed at Companies House at the
relevant time.
12 Property, plant and equipment
Mill Leasehold Buildings Estate plant, Office plant, Right-of-use assets* Construction Total
Plantations land equipment & vehicle equipment & vehicle in progress
$000 $000 $000 $000 $000 $000 $000 $000 $000
Cost
At 1 January 2022 193,866 79,657 52,485 60,863 15,847 1,962 959 5,708 411,347
Exchange translations (18,178) (7,626) (4,563) (5,731) (1,500) (163) (76) (1,264) (39,101)
Reclassification - (31) - 2,191 31 - - (2,191) -
Additions - 4,430 1,889 156 2,397 210 - 14,733 23,815
Development costs capitalised 10,455 - - - - - - - 10,455
Disposal / Written off (697) (597) (8) (217) (666) (83) - - (2,268)
At 31 December 2022 185,446 75,833 49,803 57,262 16,109 1,926 883 16,986 404,248
Exchange translations 3,062 1,506 345 1,036 209 (1) (5) 302 6,454
Reclassification - 25 - 5,531 3 (9) - (5,550) -
Additions 4,430 5,935 2,159 419 1,580 439 1,160 9,862 25,984
Development costs capitalised 7,545 - 819 - 3 - - - 8,367
Disposals / Written off (1,717) (1,799) (3) (277) (642) (234) (466) - (5,138)
At 31 December 2023 198,766 81,500 53,123 63,971 17,262 2,121 1,572 21,600 439,915
Accumulated depreciation and impairment
At 1 January 2022 75,114 31,749 3,746 25,746 12,507 1,144 809 - 150,815
Exchange translations (7,002) (3,146) (240) (2,522) (1,144) (84) (70) - (14,208)
Reclassification - (31) - - 31 - - - -
Charge for the year 8,168 3,933 118 3,107 1,146 108 144 - 16,724
Impairment losses - - 185 - 432 - - - 617
Disposal / Written off (674) (577) - (164) (619) (80) - - (2,114)
At 31 December 2022 75,606 31,928 3,809 26,167 12,353 1,088 883 - 151,834
Exchange translations 860 628 (113) 442 139 (11) - - 1,945
Reclassification - 8 - - (8) - - - -
Charge for the year 7,593 4,009 114 3,066 1,313 112 193 - 16,400
Impairment losses - - - - 35 - - - 35
Disposal / Written off (1,525) (1,693) - (164) (614) (219) (466) - (4,681)
At 31 December 2023 82,534 34,880 3,810 29,511 13,218 970 610 - 165,533
Carrying amount
At 31 December 2021 118,752 47,908 48,739 35,117 3,340 818 150 5,708 260,532
At 31 December 2022 109,840 43,905 45,994 31,095 3,756 838 - 16,986 252,414
At 31 December 2023 116,232 46,620 49,313 34,460 4,044 1,151 962 21,600 274,382
*Right-of-use assets had been disclosed in note 20.
The average capitalisation rate was 0% (2022: 0%) as there were no borrowing
cost in 2023 and 2022. The estates included $nil (2022: $nil) of interest
and $412,000 (2022: $1,198,000) of overheads capitalised during the year in
respect of expenditure on estates under development.
The Indonesian authorities have granted certain land exploitation rights and
operating permits for the estates. In the case of established estates in North
Sumatera, these rights and permits expire between 2024 and 2058 with rights
of renewal thereafter. As of estates in Bengkulu land titles were issued
between 1994 and 2016 and the titles expire between 2028 and 2051
with rights of renewal thereafter for two consecutive periods of 25 and 35
years respectively. In Riau, land titles were issued in 2003 and expire in
2033 with rights of renewal thereafter. In Kalimantan, land titles were
issued between 2015 and 2020 and expire between 2049 and 2054 with rights of
renewal thereafter. In Bangka, land titles were issued in 2018 and expire in
2053. The rights and permits for South Sumatera plantations were renewed in
2020 and the South Sumatera operations had disposed in 2023.
Subject to compliance with the laws and regulations of Indonesia, land rights
are usually renewed. The cost of renewing the land rights is not significant.
On the basis that the Group has an indefinite right to renew, leasehold land
is not depreciated except leasehold land in Malaysia. The land title of the
estate in Malaysia is a long-term lease expiring in 2084.
An impairment loss of $35,000 (2022: $432,000) related to estate plant,
equipment and vehicle in Malaysia was provided in 2023 as the recoverable
amounts based on its value-in-use were lower than the carrying amounts and the
reason of acquisition of the plant and equipment was for corporate social
responsibility purposes. The recoverable amounts are $nil (2022: $nil) as the
subsidiary in Malaysia is making loss.
Impairment for land and plantations is measured by comparing its carrying
amount with its recoverable amount, which is the higher of the fair value less
cost to sell and its value in use. The impairment assessment is performed
against the combined cost of land and plantations for each estate which
represents the cash generating unit ("CGU"). Recoverable amount is, in most
cases, based on value in use calculations as, due to the nature of the
cashflows, this will be higher than fair value less costs to sell. Where this
has been determined not to be the case, fair value less costs to sell have
also been considered.
No impairment has been recognised in 2023 in respect of land and plantations.
In 2022, an impairment loss of $185,000 has been recognised against one CGU
due to additional expenditure recognised in the year above its recoverable
amount. The total value of the Group's land and plantations for continuing
operations which is carried at its recoverable amount is $44,401,000 (2022:
$41,158,000).
The value in use, computed by the professional valuer MBPRU using a discounted
cash flow ("DCF") model, is the net present value of the projected future cash
flows over the expected 20-year economic life of the asset discounted at 13.5%
(2022: 15.4%). Projected future cash flows are calculated based on historical
data, industry performance, economic conditions and any other readily
available information including the impact of climate change. The compliance
with changing regulations, changes in buyer preferences, development of new
products and use of lower emission sources of energy will affect the
FFB production, CPO price and its growth. Heavy rainfall & flooding,
droughts and fires will have an effect on company specific risk within the
calculation of our discount rate as well as potential impacts on the ability
of our plants to produce FFB. Pests & disease will impact the upkeeping
cost.
The key assumptions have been identified as the CPO CIF-Rotterdam price, the
pre-tax discount rate and the inflation rate. Based on sensitivity analysis
performed, there are no reasonably possible changes in these assumptions which
would have a material impact on impairment.
13 Receivables: non-current
2023 2022
Book value Fair value Book value Fair value
$000 $000 $000 $000
Due from non-controlling interests - - 1,549 797
Due from cooperatives under Plasma scheme 20,306 14,757 17,414 11,729
20,306 14,757 18,963 12,526
In 2022, the non-controlling parties in PT Sawit Graha Manunggal and PT
Kahayan Agro Plantation have acquired their interests on deferred terms (see
note 27, Credit risk).
Plasma scheme is an initiative by the Indonesian Government that mandated
plantation owners to allocate a percentage of their land acquired to the
surrounding community and to further provide financial and technical
assistance to cultivate oil palm on that land to improve the income and
welfare of the community or cooperatives. During the year, certain subsidiary
companies have funded plasma with a cumulative gross amount before ECL for
$20,788,000 (2022: $17,489,000) which is recoverable from the cooperatives,
the details with ECL are disclosed in note 17.
The fair values disclosed above are for disclosure purposes and all
non-current receivables are classified as Level 3 in the fair value hierarchy.
The valuation techniques and significant unobservable inputs used in
determining the fair value measurement of non-current receivables, as well as
the inter-relationship between key unobservable inputs and fair value, are set
out in the table below:
Item Valuation approach Inputs used Inter-relationship between key unobservable inputs and fair value
Due from non-controlling interests Based on cash flows discounted using current lending rate of 6% (2022: 6%). Discount rate The higher the discount rate, the lower the fair value.
Due from cooperatives under Plasma scheme Based on cash flows discounted using an estimated current lending rate of Discount rate The higher the discount rate, the lower the fair value.
10.25% (2022: 8.50%).
14 Deferred tax
The movement on the deferred tax account as shown below:
(Restated)2022
2023 $000
$000
At 1 January 12,026 2,994
Recognised in income statement from continuing operations (2,102) 9,956
Recognised in other comprehensive income 93 (41)
Exchange differences 275 (883)
At 31 December 10,292 12,026
The most significant movement in deferred tax was due to the utilisation of
some of the losses against taxable profits during the year.
The deferred tax assets were not recognised in FY2022 because of the
understanding that generally capital losses cannot be utilised to offset
against future trading profit. Following the finalisation of the 2022 accounts
and through further research, the Group identified a provision in the
Indonesian tax law which allows capital losses from trading assets to be
offset against future trading profit.
The deferred tax asset and liability, together with the amounts recognised in
income statement and other comprehensive income are detailed as follows:
(Charged)/
credited to (Charged)/
income statement credited
Asset Liability Net $000 to equity
$000 $000 $000 $000
2023
Impairment of land 167 - 167 - -
Retirement benefits 1,920 - 1,920 305 93
BA movement - (1,193) (1,193) 192 -
Unutilised tax losses 10,331 - 10,331 (2,262) -
Unremitted earnings - (567) (567) - -
Other temporary differences - (366) (366) (337) -
Tax assets / (liabilities) 12,418 (2,126) 10,292 (2,102) 93
Set off of tax (1,364) 1,364 - - -
Net tax assets / (liabilities) 11,054 (762) 10,292 (2,102) 93
2022 (restated)
Impairment of land 164 - 164 41 -
Retirement benefits 1,495 - 1,495 (591) (41)
BA movement - (1,356) (1,356) 1,276 -
Unutilised tax losses 12,317 - 12,317 9,506 -
Unremitted earnings - (331) (331) - -
Other temporary differences - (263) (263) (276) -
Tax assets / (liabilities) 13,976 (1,950) 12,026 9,956 (41)
Set off of tax (1,203) 1,203 - - -
Net tax assets / (liabilities) 12,773 (747) 12,026 9,956 (41)
2023 2022
$000 $000
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses 21,206 19,995
The Group had recognised tax assets arising from the unutilised tax losses of
certain subsidiaries as the Group believes that the tax assets of these
subsidiaries can be realised in the future periods based on their budget, as
their respective plantation assets becoming more mature and historically
resulting in the companies becoming profitable. However, the Group does not
recognise the tax losses in certain companies within the Group as tax assets
in UK and Malaysia as the future recoverability of losses of these companies
cannot be certain and insufficient forecast future taxable profits. The time
limit on utilisation of tax losses is subject to the tax laws in various
countries. As of 31 December 2023, the relevant time limits are 5 years in
Indonesia, 7 years in Malaysia and unlimited in UK. At 31 December 2023, all
unutilised tax losses were recognised in Indonesia. The unutilised tax losses
will expire as per below:
Year $000
2025 332
2027 349
2028 9,650
10,331
At the balance sheet date, the aggregate amount of temporary differences
associated with undistributed earnings of subsidiaries for which deferred tax
liabilities have not been recognised was $857,457,000 (2022: $843,983,000).
No liability has been recognised in respect of these differences because
either the Group is in a position to control the timing of the reversal of the
temporary differences and does not expect such a reversal to occur in the
foreseeable future, or such a reversal would not give rise to an additional
tax liability. The deferred tax liability on unremitted earnings recognised at
the balance sheet date was related to the estimated dividend declared for 2023
by the subsidiaries.
15 Inventories
2023 2022
$000 $000
Estate and mill consumables 9,443 10,719
Processed produce for sale 7,241 8,871
16,684 19,590
The movement on the inventories as shown below:
2023 2022
$000 $000
As at 1 Jan 19,590 14,316
(Charge to) / reversal from income statement (3,543) 7,226
Reversal / (Provision) of inventory write-down 210 (217)
Exchange different 80 (1,735)
16,684 19,590
16 Biological assets
2023 2022
$000 $000
At 1 January 6,161 12,803
Fair value loss recognised in the income statement for continuing operations
(875) (5,792)
Fair value gain recognised in the income statement for discontinued operations
- -
Exchange translations 133 (850)
At 31 December 5,419 6,161
The valuation of the unharvested FFB was carried out internally for each
plantation of the Group. It involved an estimation of the oil-content of
unharvested FFB at balance sheet date multiplied by the sum of average FFB
selling price less average harvesting cost of the last month prior to the
balance sheet date. The oil-content was derived from the computation of the
percentage of growth based on the data extracted from the research reference
"The Reflection of Moisture Content on Palm Oil Development during the
Ripening Process of Fresh Fruits" multiplied with the estimated FFB harvested
one month after the balance sheet date. Climate change on the weather will
impact the levels and quality of production of FFB, so this has been taken
into consideration when determining the fair value of biological assets.
The fair value of biological assets is classified as Level 3 in the fair value
hierarchy. During the year, all of the opening balance of biological assets
was harvested while all of the closing balance arose in the year due to
movements in fair value less costs to sell. The gain or loss recognised in the
income statement represents the net movement in the fair value of biological
assets during the year.
The valuation techniques and significant unobservable inputs used in
determining the fair value measurement of biological assets, as well as the
inter-relationship between key unobservable inputs and fair value, are set out
in the table below:
Item Valuation approach Inputs used Inter-relationship between key unobservable inputs and fair value
Biological assets - Unharvested produce Based on FFB weight multiplied by the sum of FFB selling price less harvesting FFB weight The higher the weight, the higher the fair value
cost
FFB selling price The higher the selling price, the higher the fair value
Harvesting cost The higher the harvesting cost, the lower the fair value
The key assumptions are considered to be the computation of oil content of FFB
based on research studies, selling price less harvesting costs and FFB
production and a decrease of 1% in any of these would result in an $54,000
decrease in the valuation.
17 Trade and other receivables
2023 2022
$000 $000
Trade receivables 1,040 461
Other receivables 4,752 1,750
Prepayments and accrued income 4,897 1,257
10,689 3,468
The carrying amount of trade and other receivables classified as amortised
cost approximates fair value.
Trade receivables
The Group applies the IFRS 9 simplified approach to measure ECL using a
lifetime ECL provision for trade receivables. To measure ECL on a collective
basis, trade receivables are grouped based on similar credit risk and age.
The expected loss rate is based on a combination of the Group's historical
credit losses experienced over the 5-year period prior to the year end and
forward-looking information on macroeconomic factors affecting the Group's
customers. The ECL has been calculated at 1% on trade receivables balances.
Other receivables
The Group assesses the ECL associated with its debt instruments carried at
amortised cost on a forward-looking basis using the three stage approach. The
impairment methodology applied depends on whether there has been a significant
increase in credit risk.
The Group considers the probability of default upon initial recognition of an
asset and whether there has been significant increase in credit risk on an
on-going basis at each reporting date. To assess whether there is a
significant increase in credit risk, the Group compares the risk of default
occurring on the asset as at the reporting date with the risk of default as at
the date of initial recognition. The Group considers available, reasonable and
supportable forward-looking information, such as:
- internal credit rating;
- external credit rating (as far as available);
- actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause a significant
change to the debtor's ability to meet its obligation;
- significant changes in the value of the collateral supporting
the obligation or in the quality of third-party guarantees or credit
enhancements; and
- significant changes in the expected performance or behaviour of
the debtor, including changes in the payment status of the debtor.
There has not been a significant increase in credit risk since initial
recognition on any of the group's financial assets therefore 12-month ECL have
continued to be recognised on all balances other than trade receivables which
are discussed above.
Due from cooperatives under Plasma scheme
The Group assesses the ECL on amounts due from cooperatives under Plasma
scheme by considering various probability weighted outcomes. The three
possible outcomes are considered to be:
- recovery is limited to the value of the land and bearer plants
on which the plantation is situated;
- recovery is limited to the future cashflows of the cooperative,
being the FFB revenue less development costs; and
- recovery in full via bank financing obtained by the cooperative.
Movements on the Group's loss provision on current and non-current other
receivables and financial guarantee contracts are as follows:
2023 2022
$000 $000
At 1 January 1,622 180
Loss provision during the year 331 1,665
Written off during the year (1,441) (215)
Exchange difference (4) (8)
At 31 December 508 1,622
At 31 December 2023, the expected loss provision for receivables and financial
guarantee contracts is as follows:
Gross carrying amount Net carrying amount
$000 Loss provision $000
$000
2023
Trade receivable 1,051 (11) 1,040
Other receivables (note 17) 4,758 (6) 4,752
Receivables: non-current (note 13)
- Due from non-controlling interests - - - -
- Due from cooperatives under Plasma scheme 20,788 (482) 20,306
26,597 (499) 26,098
Financial guarantee contracts (note 26) - (9) (9)
26,597 (508) 26,089
Gross carrying amount Net carrying amount
$000 Loss provision $000
$000
2022
Trade receivables 466 (5) 461
Other receivables (note 17) 1,756 (6) 1,750
Receivables: non-current (note 13)
- Due from non-controlling interests 3,063 (1,514) 1,549
- Due from cooperatives under Plasma scheme 17,489 (75) 17,414
22,774 (1,600) 21,174
Financial guarantee contracts (note 26) - (22) (22)
22,774 (1,622) 21,152
18 Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash flows
comprised:
2023 2022
$000 $000
Cash at bank available on demand 92,682 47,658
Short-term deposits 60,289 173,802
Cash in hand 13 16
As reported in statement of financial position 152,984 221,476
Short-term investments 14,076 55,566
167,060 277,042
The short-term investments refer to the deposits with a licensed bank with
maturity of over three months.
Significant non-cash transactions from investing activities are as follows:
2023 2022
$000 $000
Property, plant and equipment purchased but not yet paid at year end 53 466
Repayment of amounts due from cooperatives under the plasma scheme through 6,776 7,401
the purchase of FFB
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions as follows:
Non-current lease liabilities
Current lease liabilities
Total
$000 $000 $000
At 1 January 2023 (31) (73) (104)
Cash Flows - 288 288
Non-cash flows
- Effect of foreign exchange 1 3 4
- New lease (709) (443) (1,152)
- Lease liabilities classified as non-current at 31 December 2022 becoming
current during 2023
30 (30) -
- Interest accruing during the year - (45) (45)
- Write off - - -
(709) (300) (1,009)
Non-current lease liabilities
Current
lease liabilities
Total
$000 $000 $000
At 1 January 2022 (110) (240) (350)
Cash Flows - 231 231
Non-cash flows
- Effect of foreign exchange 6 21 27
- New lease - - -
- Lease liabilities classified as non-current at 31 December 2021 becoming
current during 2022
73 (73) -
- Interest accruing during the year - (12) (12)
- Write off - - -
(31) (73) (104)
19 Trade and other payables
2023 2022
$000 $000
Trade payables 9,572 11,487
Other payables 1,041 3,321
Advance receipts 6,666 9,424
Accruals 10,177 9,734
27,456 33,966
The carrying amount of trade and other payables classified as financial
liabilities measured at amortised cost approximates fair value. Advance
receipts from customers are expected to be recognised in full as revenue in
the subsequent year. The advance receipts at 31 December 2022 have been
recognised in revenue in the current period.
20 Leases
2023 2022
$000 $000
Lease liabilities analysed as:
Non-current (709) (31)
Current (300) (73)
(1,009) (104)
The weighted average incremental borrowing rate per annum was 7.3% (2022:
5.5%).
Maturity analysis for the lease liabilities has been given in note 27.
Amounts recognised in income statement:
2023 2022
$000 $000
Depreciation expense on right-of-use assets (note 12) (193) (144)
Interest expense on lease liabilities (45) (12)
Expense relating to short-term leases (269) (352)
Expense relating to leases of low value assets (4) (4)
(511) (512)
At 31 December 2023, the Group was committed to $0.01 million (2022: $0.01
million) for short-term leases.
All the leases are fixed payments. The total cash outflow for leases amount to
$0.56 million (2022: $0.59 million).
The Group leases a piece of land and office under the right-of-use assets. The
remaining lease term is between 1 to 5 years. (2022: 1 to 4 years). On expiry
the Group has the options to renew based on mutually agreed future rental. The
right-of-use assets is classified as part of property, plant and equipment in
note 12.
Right-of-Use assets
Land Building Total
$000 $000 $000
At 1 January 2023 - - -
Additions - 1,160 1,160
Amortisation - (193) (193)
Impairment losses - - -
Effect of foreign exchange - (5) (5)
At 31 December 2023 - 962 962
Land Building Total
$000 $000 $000
At 1 January 2022 - 150 150
Additions - - -
Amortisation - (144) (144)
Impairment losses - - -
Effect of foreign exchange - (6) (6)
At 31 December 2022 - - -
Lease liabilities
Land Building Total
$000 $000 $000
At 1 January 2023 (104) - (104)
Additions - (1,152) (1,152)
Interest expense (3) (42) (45)
Lease payments 73 215 288
Effect of foreign exchange 4 - 4
At 31 December 2023 (30) (979) (1,009)
Land Building Total
$000 $000 $000
At 1 January 2022 (183) (167) (350)
Additions - - -
Interest expense (8) (4) (12)
Lease payments 76 155 231
Effect of foreign exchange 11 16 27
At 31 December 2022 (104) - (104)
The tables above do not include the leasehold land which is classified as a
right of use asset presented in note 12.
21 Retirement benefits
The Group provides Post-Employment Benefit plans to its employees in Indonesia
in accordance with Job Creation Law No.11/2020, Government Regulation
No.35/2021 effective since February 2021 and Collective Labour Agreements.
These are defined benefit plans and provide lump sum benefits to employees on
retirement, death, disability and voluntary resignation. There is no
requirement for the Group to advance fund these benefits.
The Group has set up a separate fund with PT Asuransi Allianz Life Indonesia
to fund the Post-Employment Benefit plan obligation for Staff employees. The
assets in the fund can only be used to pay the employees' benefits.
Defined contribution plan managed by Dana Pension Lembaga Keuangan AIA
Financial ("DPLK AIAF") and allocated to the individual participants. From
2020 onwards, these employees will receive the higher of the benefit from DPLK
AIAF and the Post-Employment Benefit plan. The DPLK AIAF plan covers a smaller
proportion of the overall Post-Employment Benefit obligation.
The Group provides other long-term employee benefits in the form of Long
Service Awards for Staff and Non-Staff employees in Indonesia. The Long
Service Awards are for amounts of up to 2 months of basic salary, paid on
completion of 10 or 20 years' continuous service (Staff) and on completion of
25, 30, 35, and 40 years' continuous service (Non-Staff). These benefits are
unfunded.
The defined benefit plans are valued by an actuary at the end of each
financial year. The major assumptions used by the actuary were:
2023 2022
Rate of increase in wages 8.0% 8.0%
Discount rate 6.8% 7.3%
Mortality rate* 100% TMI4 100% TMI4
Disability rate 10% TMI4 10% TMI4
*Mortality Table used in this calculation is Tabel Mortalita Indonesia IV (TMI
IV) which was released in December 2019. This is the latest table which
reflects the mortality rate of Indonesia's population. The mortality rate in
the table differs by age and gender.
2023 2022
$000 $000
Service cost
Current service cost 1,539 1,522
Past service cost 375 -
Adjustment due to change in attribution method - (1,556)
Cost of termination - 780
Net interest expense 616 687
Remeasurements on net defined benefit liability 51 (26)
Total employee benefits expense 2,581 1,407
The reconciliation on the remeasurement of retirement benefit plan as shown
below:
2023 2022
$000 $000
Included in other comprehensive income:
Continuing operations 375 147
Discontinued operations - 30
Remeasurement of retirement benefit plan, net of tax recognised in other
comprehensive income
375 177
Included in other comprehensive income:
Remeasurement of retirement benefit plan 468 225
Deferred tax on retirement benefits (93) (48)
Remeasurement of retirement benefit plan, net of tax recognised in other
comprehensive income
375 177
(i) Reconciliation of defined benefit obligation and fair value of scheme
assets including discontinued operations
Defined benefit obligation Fair value of scheme assets Net defined scheme liability
Funded Unfunded Funded Unfunded Funded Unfunded
scheme scheme Total scheme scheme Total scheme scheme Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2022 (4,569) (8,177) (12,746) 1,247 - 1,247 (3,322) (8,177) (11,499)
Service cost - current (377) (1,145) (1,522) - - - (377) (1,145) (1,522)
Service cost - past - - - - - - - - -
Adjustment due to change in attribution method
444 1,112 1,556 - - - 444 1,112 1,556
Cost of termination - (780) (780) - - - - (780) (780)
Interest (cost) / income (272) (507) (779) 92 - 92 (180) (507) (687)
Remeasurements on net defined benefit liability
- 26 26 - - - - 26 26
Included in income statement (205) (1,294) (1,499) 92 - 92 (113) (1,294) (1,407)
Remeasurement gain / (loss)
Actuarial gain / (loss) from:
Adjustments (experience) 89 428 517 - - - 89 428 517
Financial assumptions (72) (172) (244) - - - (72) (172) (244)
Return on plan assets (exclude interest)
- - - (48) - (48) (48) - (48)
Included in other comprehensive income 17 256 273 (48) - (48) (31) 256 225
Effect of movements in exchange rates 429 803 1,232 (135) - (135) 294 803 1,097
Employer contribution
- - - 317 - 317 317 - 317
Benefits paid 117 314 431 (38) - (38) 79 314 393
Other movements 546 1,117 1,663 144 - 144 690 1,117 1,807
At 31 December 2022 (4,211) (8,098) (12,309) 1,435 - 1,435 (2,776) (8,098) (10,874)
Defined benefit obligation Fair value of scheme assets Net defined scheme liability
Funded Unfunded Funded Unfunded Funded Unfunded
scheme scheme Total scheme scheme Total scheme scheme Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2023 (4,211) (8,098) (12,309) 1,435 - 1,435 (2,776) (8,098) (10,874)
Service cost - current (722) (817) (1,539) - - - (722) (817) (1,539)
Service cost - past (373) (2) (375) - - - (373) (2) (375)
Adjustment due to change in attribution method
(2,114) 2,114 - - - - (2,114) 2,114 -
Interest (cost) / income (370) (351) (721) 105 - 105 (265) (351) (616)
Remeasurements on net defined benefit liability
- (51) (51) - - - - (51) (51)
Included in income statement (3,579) 893 (2,686) 105 - 105 (3,474) 893 (2,581)
Remeasurement (loss) / gain
Actuarial (loss) / gain from:
Adjustments (experience) (179) 197 18 - - - (179) 197 18
Financial assumptions (242) (232) (474) - - - (242) (232) (474)
Return on plan assets (exclude interest)
- - - (12) - (12) (12) - (12)
Included in other comprehensive income (421) (35) (456) (12) - (12) (433) (35) (468)
Effect of movements in exchange rates
(53) (193) (246) 26 - 26 (27) (193) (220)
Employer contribution - - - 742 - 742 742 - 742
Benefits paid 689 324 1,013 (516) - (516) 173 324 497
Cost of termination - payment - 1,956 1,956 - - - - 1,956 1,956
Cost of termination 196 (546) (350) - - - 196 (546) (350)
Other movements 832 1,541 2,373 252 - 252 1,084 1,541 2,625
At 31 December 2023 (7,379) (5,699) (13,078) 1,780 - 1,780 (5,599) (5,699) (11,298)
(ii) Disaggregation of defined benefit scheme assets
The fair value of the funded assets is analysed as follows:
2023 2022
$000 $000
Bonds
- Government bonds 1,090 556
- Corporate bonds - -
1,090 556
Cash / deposits 690 879
1,780 1,435
None of the plan assets are invested in the Group's own financial instruments,
property or other assets used by the Group. All plan assets invested in bonds
which have a quoted market price in an active market.
(iii) Defined benefit obligation - sensitivity analysis
The following table exhibits the sensitivity of the Group's retirement
benefits to the fluctuation in the discount rate, wages and mortality rate:
Reasonably Defined benefit obligation
Possible Increase Decrease
Change $000 $000
Discount rate (+ / - 1%) (984) 1,112
Growth in wages (+ / - 1%) 1,142 (1,029)
The weighted average duration of the defined benefit obligation is 8.78 years
(2022: 8.85 years).
The total contribution paid into the defined contribution plan in 2023
amounted to $227,000 (2022: $223,000). The Group expects to pay contributions
of $495,000 to the funded plans in 2024. For the unfunded plans, the Group
pays the benefits directly to the individuals; the Group expects to make
direct benefit payments of $653,000 for defined benefit plan and $235,000 for
defined contribution plan in 2024.
22 Share capital and treasury shares
Issued and Issued and Issued and
Authorised fully paid Authorised fully paid Authorised fully paid
Number Number £000 £000 $000 $000
Ordinary shares of 25p each
Beginning and end of year 60,000,000 39,976,272 15,000 9,994 23,865 15,504
Cost Cost
2023 2022 2023 2022
Treasury shares: Number Number $'000 $'000
Beginning of year 339,900 339,900 (1,171) (1,171)
Share buy back 75,926 - (676) -
End of year 415,826 339,900 (1,847) (1,171)
Market value of treasury shares: $'000
Beginning of year (800.0p/share) 3,274
End of year (670.0p/share) 3,551
75,926 treasury share was purchased in 2023 (2022: Nil).
All fully paid ordinary shares have full voting rights, as well as to receive
the distribution of dividends and repayment of capital upon winding up of
company.
23 Ultimate controlling shareholder
At 31 December 2023, Genton International Limited ("Genton"), a
company registered in Hong Kong, held 20,247,814 (2022: 20,247,814) shares of
the Company representing 51.2% (2022: 51.1%) of the issued share capital of
the Company. Together with other deemed interested parties, Genton's
shareholding totals 20,551,914 or 52.0%. The ultimate beneficial shareholders
of Genton International Limited are vested in the estates of Madam Lim with
the application for probate in progress.
24 Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
An office premises lease agreement was entered with Infra Sari Sdn Bhd, a
company controlled by the late Madam Lim Siew Kim. The rental paid during the
year was $246,317 (2022: $339,140). There was no balance outstanding at the
year end (2022: Nil). This has been classified as a long term lease as the
premises are renovated since 2023 and therefore lease payments have been
offset in lease liabilities from September 2023.
In 2021, a land lease agreement was entered with Hana Bestari Sdn Bhd, company
controlled by the late Madam Lim Siew Kim. The rental paid during the year was
$75,415 (2022: $78,405). There was no balance outstanding at the year end.
In 2023, the final dividend paid to Genton International Limited, a company
controlled by the late Madam Lim Siew Kim, was $5,061,954 for the year ended
31 December 2022 (2022: $1,012,391 for the year ended 31 December 2021) and an
interim dividend was paid to Genton International Limited was $3,037,172 for
the year ended 31 December 2023. The final dividend paid to other companies
controlled by the late Madam Lim Siew Kim was $76,025 for the year ended 31
December 2022 (2022: $15,205 for the year ended 31 December 2021). There was
no balance outstanding at the year end (2022: Nil). The interim dividend paid
to other companies controlled by the late Madam Lim Siew Kim was $45,615 for
the year ended 31 December 2023.
In March 2023, Dato' John Lim purchased 15,894 of the Company's ordinary
shares at averaged price of £7.97.
25 Reserves
Nature and purpose of each reserve:
Share capital
Amount of shares subscribed at nominal
value.
Share premium
Amount subscribed for share capital in excess of nominal value.
Capital redemption reserve Amounts transferred from
share capital on redemption of issued shares.
Treasury shares
Cost of own shares held in treasury.
Revaluation reserves
Gains/losses arising on the revaluation of the Group's property, net of tax.
Exchange reserves
Gains/losses arising from translating the net assets of overseas operations
into US Dollar.
Retained earnings
Cumulative net gains and losses recognised in the consolidated income
statement.
26 Guarantees and other financial commitments
2023 2022
$000 $000
Capital commitments at 31 December
Contracted but not provided - normal estate operations 282 1,310
Contracted but not provided - mill development 23 16,058
Authorised but not contracted - plantation and mill development 34,143 28,558
A subsidiary company, PT Sawit Graha Manunggal ("SGM") has provided a
corporate guarantee to Koperasi Bartim Sawit Sejahtera ("KBSS"), a party under
Plasma scheme as disclosed in note 13, in relation to a loan taken by KBSS
from PT Bank Mandiri (Persero) Tbk. of Rp226.02 billion
($14.7million) (2022: Rp226.02 billion, $14.4 million). The corporate
guarantee remains until the loan is fully settled by 23 December 2027. The
HGU (land usage right) that belongs to the Plasma scheme is currently held
under SGM's master title. An application to separate the HGU was submitted to
the Land Office and the land and its plantation with a total carrying
amount of $13.5 million as at 31 December 2023 (31 December 2022: $11.1
million) will be pledged to the bank as security once the title separation
approval is obtained. In addition, the terms and conditions of the loan
agreement also require KBSS to sell all its FFB produce to SGM and the
plantation estate is to be managed by SGM. In view of these, the Group
exposure to this contingent liability is minimised.
On 3 February 2017, a subsidiary company, PT Alno Agro Utama and Koperasi
Perkebunan Plasma Maju Sejahtera ("KPPM") signed a Refinancing Agreement with
PT Bank Syariah Mandiri ("BSM") to fund its plasma development. The Agreement
provides a loan of Rp 8.75 billion ($0.6 million) (2022: Rp8.75 billion, $0.6
million), with 10 (Ten) years maturity period effective from 24 July 2017 with
an interest rate of 13.25% per annum and in 2021 decreased to 12.5% per
annum. This loan is collateralized by 125.4 hectares of KPPM's land located
in Desa Serami Baru, Kecamatan Malin Deman, Kabupaten Mukomuko, Bengkulu and
its plantation with a carrying amount of $0.6 million as at 31 December 2023
(31 December 2022: $0.6 million) as security under the agreement while the
Company provides corporate guarantee amounting to Rp 8.75 billion ($0.6
million).
The Group's loss provision on these financial guarantee contracts was $9,000
(2022: $22,000). The details of the ECL were disclosed in note 17.
27 Disclosure of financial instruments and other risks
The Group's principal financial instruments comprised investment, cash, short
and long-term bank loans, trade receivables excluding prepayments and payables
excluding advance receipts and receivables from local partners in respect of
their investments.
The Group's accounting classification of each class of financial asset and
liability at 31 December 2023 and 2022 were:
Fair value through profit and loss Financial assets at amortised cost
$000 $000 Financial Total carrying value
liabilities at $000
amortised cost
$000
2023
Investment 10,035 - - 10,035
Non-current receivables - 20,306 - 20,306
Trade and other receivables - 5,792 - 5,792
Short-term investments - 14,076 - 14,076
Cash and cash equivalent - 152,984 - 152,984
Trade and other payables - - (20,790) (20,790)
10,035 193,158 (20,790) 182,403
Fair value through profit and loss Financial assets at amortised cost Financial Total carrying value
$000 $000 liabilities at amortised cost $000
$000
2022
Investment 42 - - 42
Non-current receivables - 18,963 - 18,963
Trade and other receivables - 2,211 - 2,211
Short-term investments - 55,566 - 55,566
Cash and cash equivalent - 221,476 - 221,476
Trade and other payables - - (24,542) (24,542)
42 298,216 (24,542) 273,716
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, trade and other receivables, trade and other payables, borrowings
due within one year and non-current receivables.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, trade and other payables
approximates their fair value. The non-current receivables were measured at
cost less ECL however disclosure of fair value has been given in note 13 for
comparison purposes.
Please refer to the applicable notes for details of the fair value hierarchy,
valuation techniques, and significant unobservable inputs related to
determining the fair value of the following items:
- Non-current receivables (note 13); and
The principal financial risks to which the Group is exposed are:
- commodity selling price changes; and
- exchange movements;
which, in turn, can affect financial instruments and/or operating
performance.
The Company does not hedge any of its risks. Its trade credit risks are low.
Financial assets or liabilities that are held at fair value through the profit
or loss include investment to generate higher return.
The Board is directly responsible for setting policies in relation to
financial risk management and monitors the levels of the main risks through
review of regular operational reports.
Commodity selling prices
The Group does not normally contract to sell produce more than
one month ahead.
Currency risk
Most of the Group's operations are in Indonesia. The Company and Group
accounts are prepared in US Dollar which is not the functional currency of the
operating subsidiaries. The Group does not hedge its net investment in its
overseas subsidiaries and is therefore exposed to a currency risk on that
investment. The historical cost of investment (including intercompany loans)
by the parent in its subsidiaries amounted to $29,309,000 (2022: $50,746,000),
while the statement of financial position value of the Group's share of
underlying assets at 31 December 2023 amounted to $523,696,000 (2022:
$472,112,000).
All the Group's sales are made in local currency and any trade receivables are
therefore denominated in local currency. No hedging is therefore necessary.
Selling prices of the Group's produce are directly related to the US Dollar
denominated world prices. Appreciation of local currencies, therefore, reduces
profits and cash flow of the Indonesian and Malaysian subsidiaries in US
Dollar terms and vice versa.
There are no borrowings in the Group and therefore there is no longer any
currency risk for the Group in respect of this. The average interest rate on
local currency deposits was 0.19% higher (2022: 0.88% higher) than on US
Dollar deposits. The unmatched balance at 31 December 2023 was represented by
the $6,844,000 shown in the table below (2022: $13,142,000).
The table below shows the net monetary assets and liabilities of the Group as
at 31 December 2023 and 2022 that were not denominated in the operating or
functional currency of the operating unit involved.
Net foreign currency assets/(liabilities)
US Dollar Sterling Total
Functional currency of Group operation $000 $000 $000
2023
Rupiah 6,538 - 6,538
US Dollar - 990 990
Ringgit 306 - 306
Total 6,844 990 7,834
2022
Rupiah 12,976 - 12,976
US Dollar - 355 355
Ringgit 166 - 166
Total 13,142 355 13,497
The following table summarises the sensitivity of the Group's financial assets
and financial liabilities to foreign exchange risk. The impact on profit
before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against
US Dollar:
2023 2022
Carrying -10% in +10% in Carrying -10% in +10% in
Amount US$ Rp : $ and Rp : $ and Amount Rp : $ and Rp : $ and
RM : $ RM : $ US$ RM : $ RM : $
$000 $000 $000 $000 $000 $000
Financial Assets
Non-current receivables 20,306 (1,846) 2,256 18,963 (1,583) 1,935
Trade and other receivables 5,792 (206) 252 2,211 (196) 239
Short-term investments 14,076 (1,280) 1,564 55,566 (5,051) 6,174
Cash and cash equivalents 152,984 (13,763) 16,822 221,476 (20,047) 24,502
Financial Liabilities
Trade and other payables (20,790) 1,800 (2,200) (24,542) 2,142 (2,618)
Total (decrease) / increase (15,295) 18,694 (24,735) 30,232
Liquidity risk
Profitability of new sizable plantations normally requires a
period of between six and seven years before cash flow turns positive. Because
oil palms do not begin yielding significantly until four years after planting,
this development period and the cash requirement is affected by changes in
commodity prices.
The Group attempts to ensure that it is likely to have either self-generated
funds or further loan/equity capital to complete its development plans and to
meet loan repayments. Long-term forecasts are updated twice a year for review
by the Board. In the event that falling commodity prices reduce self-generated
funds below expectations and to a level where Group resources may be
insufficient, further new planting may be restricted. Consideration is given
to the funds required to bring existing immature plantings to maturity.
The Group's trade and tax payables are all due for settlement within a year.
At 31 December 2023, the Group had no external loans and facilities.
The following table sets out the undiscounted contractual cashflows of
financial liabilities:
Less than 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years
Total
$000 $000 $000 $000 $000
At 31 December 2023
Trade and other payables (10,613) - - - (10,613)
Accruals (10,177) - - - (10,177)
Lease liabilities (364) (333) (453) - (1,150)
(21,154) (333) (453) - (21,940)
Financial guarantee contracts
provided to Plasma
- loan repayment by Plasma (366) (379) (202) - (947)
(21,520) (712) (655) - (22,887)
At 31 December 2022
Trade and other payables (14,808) - - - (14,808)
Accruals (9,734) - - - (9,734)
Lease liabilities (76) (32) - - (108)
(24,618) (32) - - (24,650)
Financial guarantee contracts provided to Plasma
- loan repayment by Plasma (1,238) (677) (251) - (2,166)
(25,856) (709) (251) - (26,816)
The figures for trade and other payables exclude accruals and advance
receipts.
The Group does not face a significant liquidity risk with regard to its
financial liabilities.
Interest rate risk
The Group's surplus cash is subject to variable interest rates. The Group had
net cash throughout 2023. A 1% change in the deposit interest rate would not
have a significant impact on the Group's reported results as shown in the
table below.
2023 2022
Carrying amount -1% in interest rate +1% in interest rate Carrying amount -1% in interest rate +1% in interest rate
$000 $000 $000 $000 $000 $000
Financial Assets
Short-term investments 14,076 (208) 74 55,566 (811) 300
Cash and cash equivalents 152,984 (1,407) 1,543 221,476 (1,904) 2,422
Total (decrease) / increase (1,615) 1,617 (2,715) 2,722
There is no policy to hedge interest rates, partly because of the net cash
position and the net interest income position of the Group.
Interest rate profiles of the Group's financial assets (comprising non-current
receivables, trade and other receivables, cash and cash equivalent and
short-term investments) at 31 December were:
Variable rate No interest
Total Fixed rate
$000 $000 $000 $000
2023
Sterling 1,313 - 62 1,251
US Dollar 10,657 - 3,056 7,601
Rupiah 178,540 - 156,274 22,266
Ringgit 2,648 - 2,338 310
Total 193,158 - 161,730 31,428
2022
Sterling 658 - 56 602
US Dollar 15,181 1,549 9,341 4,291
Rupiah 278,685 - 259,439 19,246
Ringgit 3,692 - 3,370 322
Total 298,216 1,549 272,206 24,461
Long-term receivables before ECL of $nil (2022: $3,063,000) comprise US Dollar
denominated amounts due from non-controlling interests as described in note 13
on which interest is due at a fixed rate of 6%.
Average US Dollar deposit rate in 2023 was 4.30% (2022: 2.75%) and Rupiah
deposit rate was 4.49% (2022: 3.63%).
Interest rate profiles of the Group's financial liabilities (comprising other
payables excluding advance receipts) at 31 December were:
Variable rate No interest
Total Fixed rate
$000 $000 $000 $000
2023
Sterling - - - -
US Dollar (852) - - (852)
Rupiah (19,734) - - (19,734)
Ringgit (204) - - (204)
Total (20,790) - - (20,790)
2022
Sterling - - - -
US Dollar (841) - - (841)
Rupiah (23,500) - - (23,500)
Ringgit (201) - - (201)
Total (24,542) - - (24,542)
Weighted average interest rate on variable rate borrowings was nil in 2023
(2022: nil).
Credit risk
The Group has two types of financial assets that are subject to the ECL model:
• trade receivables for sales of goods and services; and
• current and non-current receivables carried at
amortised cost.
The Group also has financial guarantee contracts for which the ECL model is
also applicable.
While cash and cash equivalents are also subject to the impairment
requirements as set out in IFRS 9, there is no impairment loss identified
given the financial strength of the financial institutions in which the Group
have a relationship with. Credit risk arises from cash and cash equivalents
and deposits with banks and financial institutions. The Group has taken
necessary steps and precautions in minimising the credit risk by lodging cash
and cash equivalents only with reputable licensed banks, and particularly in
Indonesia, independently rated banks with a minimum rating of "A". The cash
and cash equivalents are in US dollars, Rupiah, Ringgit and Sterling according
to the requirements of the Group. The list of the principal banks used by the
Group is given on the inside of the back cover of this report.
The Group use three categories for those receivables which reflect their
credit risk and how the loss provision is determined for those categories.
(i) Trade receivables using the simplified approach
The Group applies the simplified approach under IFRS 9 to measure ECL, which
uses a lifetime expected loss provision for all trade receivables. To measure
the expected losses, trade receivables have been grouped based on shared
credit risk characteristics and days past due.
The expected loss rates are based on historical payment profiles of sales and
the corresponding historical credit losses experienced during these periods.
The historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors (such as palm product prices and crude
oil price) affecting the ability of the customers to settle the receivables.
The historical loss rates will be adjusted based on the expected changes in
these factors. No significant changes to estimation techniques or assumptions
were made during the reporting period.
In determining the expected loss rates, the Group also takes into
consideration the collateral or payments received in advance, as set out
below:
Receivables are generally collected within the credit term and therefore there
is minimal exposure to doubtful debts. Upfront payments are also collected for
certain sales made by the Group's subsidiaries in Indonesia.
The Group's maximum exposure to credit risk and loss provision recognised as
at 31 December 2023 is disclosed in note 17. The ECL has been calculated at 1%
on trade receivables balances while the remaining amount in which no ECL
provision was recognised is deemed to be recoverable, with low probability of
default. Default is defined by the management as the non-repayment of the
balance.
(ii) Debt instruments at amortised costs other than trade receivables
using the three-stage approach
All of the Group's debt instruments at amortised costs other than trade
receivables are considered to have a low credit risk, except amount due from
cooperatives under Plasma scheme are considered to have higher credit risk, as
these were considered to be performing, have low risks of default and
historically there were minimal instances where contractual cash flow
obligations have not been met. There has not been a significant increase in
credit risk since initial recognition.
The 12-month ECL has been calculated at 1% on the majority of balances (unless
it has been considered there to be no ECL), with the exception of amounts due
from cooperatives under Plasma scheme where the ECL is largely calculated,
having considered various probability weighted outcomes, as being the balance
of the receivable in excess of the value of the associated land and plantation
assets on which the Plasma land resides which effectively would be returned to
the Company if the receivable is not repaid.
The maximum exposure to credit risks for debt instruments at amortised cost
other than trade receivables are represented by the carrying amounts
recognised in the statements of financial position.
(iii) Financial guarantee contracts using the three-stage approach
All of the financial guarantee contracts are considered to be performing, have
low risks of default and historically there were no instances where these
financial guarantee contracts were called upon by the parties of which the
financial guarantee contracts were issued. Accordingly,12-month ECL have been
recognised at 1% on the financial guarantee contracts and disclosed in note
26.
Information regarding other non-current assets and trade and other receivables
is disclosed in notes 13 and 17 respectively. Amounts receivable from local
partners before ECL, amounting to $nil (2022: $3,063,000), in relation to
their investments in operating subsidiaries are secured on those investments
and are repayable from their share of dividends from those subsidiaries.
Amounts receivable due from cooperatives under Plasma scheme, as disclosed in
note 13, are unsecured and are to be repaid from FFB supplied by the
cooperatives. The provision of ECL for amounts receivable due from
cooperatives under Plasma scheme had been disclosed in note 17.
Deposits with banks and other financial institutions and investment securities
are placed, or entered into, with reputable financial institutions or
companies with high credit ratings and no history of default.
As the Group does not hold any collateral, the maximum exposure to credit risk
for each class of financial instrument is the carrying amount presented on the
statement of financial position, except in the case of the financial guarantee
contracts offered by two subsidiaries to cooperatives in order for them to
obtain bank loans in 2013 and 2017, which are not held on the statement of
financial position of the Group. See note 26.
Capital
The Group defines its Capital as Share capital and Reserves, shown in the
statement of financial position as "Issued capital attributable to owners of
the parent" and amounting to $523,696,000 at 31 December 2023 (2022:
$472,112,000).
Group policy presently attempts to fund development from self-generated funds
and loans and not from the issue of new share capital. At 31 December 2023,
the Group had no borrowings (2022: nil) but, depending on market conditions,
the Board is prepared for the Group to have net borrowings.
Plantation industry risk
Please refer to principal and emerging risks and uncertainties in the
Strategic Report.
28 Subsidiary companies
The principal subsidiaries of the Company all of which have been included in
these consolidated financial statements are as follows:
Name Country of incorporation and principal place of business Proportion of ownership interest at 31 December Non-controlling interests ownership / voting interest at 31 December
2023 2022 2023 2022
Principal sub-holding company
Anglo-Indonesian Oil Palms Limited*** United Kingdom 100% 100% - -
Management company
Anglo-Eastern Plantations Management Sdn Bhd*** Malaysia 100% 100% - -
PT Anglo-Eastern Plantations Management Indonesia Indonesia 100% 100% - -
Operating companies
Anglo-Eastern Plantations (M) Sdn Bhd*** Malaysia 55% 55% 45% 45%
All For You Sdn Bhd Malaysia 100% 100% - -
PT Alno Agro Utama* Indonesia 100% 90% - 10%
PT Anak Tasik Indonesia 100% 100% - -
PT Bangka Malindo Lestari Indonesia 95% 95% 5% 5%
PT Bina Pitri Jaya* Indonesia 100% 80% - 20%
PT Cahaya Pelita Andhika Indonesia 100% 100% - -
PT Empat Lawang Agro Perkasa** Indonesia - 80% - 20%
PT Hijau Pryan Perdana* Indonesia 100% 80% - 20%
PT Kahayan Agro Plantation* Indonesia 99.5% 78% 0.5% 22%
PT Karya Kencana Sentosa Tiga** Indonesia - 81% - 19%
PT Mitra Puding Mas* Indonesia 100% 90% - 10%
PT Musam Utjing* Indonesia 100% 75% - 25%
PT Riau Agrindo Agung** Indonesia - 76% - 24%
PT Sawit Graha Manunggal* Indonesia 100% 86% - 14%
PT Simpang Ampat Indonesia 100% 100% - -
PT Tasik Raja* Indonesia 100% 80% - 20%
PT United Kingdom Indonesia Plantations* Indonesia 100% 75% - 25%
Dormant companies
The Ampat (Sumatra) Rubber Estate (1913) Limited United Kingdom 100% 100% - -
Gadek Indonesia (1975) Limited United Kingdom 100% 100% - -
Mergerset (1980) Limited United Kingdom 100% 100% - -
Musam Indonesia Limited United Kingdom 100% 100% - -
Indopalm Services Limited*** United Kingdom 100% 100% - -
*The Group purchased most of the shares of the non-controlling interest during
the year. Hence, the Company's effective ownership has increased.
**The decrease in the Company's effective ownership of these subsidiaries is
due to the disposal of three subsidiaries during the year.
*** Direct subsidiaries of the Company
The principal United Kingdom sub-holding company, and UK dormant companies are
registered in England and Wales. The Malaysian operating companies and
management company are incorporated in Malaysia. The Indonesian operating
companies and management company are incorporated in Indonesia. The principal
activity of the operating companies is plantation agriculture. The registered
office of the principal subsidiaries is disclosed below:
Subsidiaries by country Registered address
UK registered subsidiaries Quadrant House, 6(th) Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
Malaysia registered subsidiaries 7(th) Floor, Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Indonesia registered subsidiaries Sinar Mas Land Plaza, 3(rd) Floor #301, Jl. Pangeran Diponegoro No. 18
Kelurahan Madras Hulu, Kecamatan Medan Polonia
Medan 20152, North Sumatera
Indonesia
29 Non-controlling interests
In 2023, none of the subsidiaries which have non-controlling interests ("NCI")
contributed more than 10% of the Group's total assets.
In 2022, the Group identified subsidiaries with material NCI based on the
total assets in relation to the Group. A subsidiary's NCI is material if the
subsidiary contributed more than 10% of the Group's total assets. The
subsidiaries identified and their summarised financial information, before
intra-group eliminations, are presented below:
Entity PT Tasik Raja PT Mitra Puding Mas PT Alno Agro Utama PT Bina Pitri Jaya PT Sawit Graha Manunggal
20% 10% 10% 20% 14%
NCI percentage
Summarised income statement
For the year ended 31 December 2022 2022 2022 2022 2022
$000 $000 $000 $000 $000
Revenue 98,634 52,774 82,196 77,688 84,008
Profit after tax 20,520 9,965 16,142 19,309 20,236
Other comprehensive income / (expense) (17,198) (9,075) (9,752) (16,980) (4,468)
Total comprehensive income 3,322 890 6,390 2,329 15,768
Profit allocated to NCI 4,104 997 1,614 3,862 3,668
Other comprehensive (expenses) / income allocated to NCI (3,440) (908) (975) (3,396) (610)
Total comprehensive income allocated to NCI 664 89 639 466 3,058
Dividends paid to NCI 570 372 247 621 -
Summarised statement of financial position
As at 31 December 2022 2022 2022 2022 2022
$000 $000 $000 $000 $000
Non-current assets 79,864 41,958 48,883 105,308 73,771
Current assets 79,622 46,189 50,828 46,071 18,820
Non-current liabilities (704) (1,116) (2,280) (1,077) (28,647)
Current liabilities (12,273) (5,010) (5,442) (6,007) (10,948)
Net assets 146,509 82,021 91,989 144,295 52,996
Accumulated NCI 29,302 8,202 9,199 28,859 7,232
Summarised cash flows
For the year ended 31 December 2022 2022 2022 2022 2022
$000 $000 $000 $000 $000
Cash flows from operating activities 16,391 8,357 14,688 100,500 27,631
Cash flows used in investing activities (2,373) (8,645) (14,328) (75,523) (5,514)
Cash flows (used in) / from financing activities (19,623) 17,369 (2,468) (2,620) (20,037)
Net cash (outflows) / inflows (5,605) 17,081 (2,108) 22,357 2,080
30 Investment
The movement of the fair value through profit and loss investment as
following:
2023 2022
$000 $000
1 January 42 49
Exchange differences - -
Additions 9,948 -
Change in fair value recognised in profit and loss 45 (7)
31 December 10,035 42
Fair value through profit and loss financial assets includes the following:
2023 2022
$000 $000
Quoted:
Equity securities - United Kingdom 27 42
Unquoted:
Investment portfolio - Luxembourg 10,008 -
10,035 42
Financial assets measured at fair value through profit and loss include the
Group's strategic to aim for higher return. During the year, the Board
allocated $10,000,000 to a fund manager to invest in structured products.
These structured products are nevertheless capital protected as the Board
exercised prudence, amidst generally low risk appetite. Out of the $10,000,000
allocated, the fund manager had invested of $9,948,000 in FY2023.
Fair value through profit and loss financial assets are denominated in the
following currencies:
2023 2022
$000 $000
Currency
Sterling 27 42
US Dollar 10,008 -
10,035 42
The fair value of investment for quoted equity securities is classified as
Level 1 in the fair value hierarchy and fair value of investment for unquoted
investment portfolio is classified as Level 2.
The valuation inputs for quoted equity securities are obtained from the active
market while for unquoted investment portfolio is obtained from the custodian
bank. Where this value is below the amount initially invested, the fair value
has been determined to be the cost of the investment due to protected capital
arrangements in place.
31 Acquisition of non-controlling interests
In June 2023, the Group acquired some additional 0.4% and 4.5% interest in the
voting shares of PT Sawit Graha Manunggal ("SGM") and PT Kahayan Agro
Plantation ("KAP"), respectively, increasing the Group ownership interest to
almost 100% with a consideration of $2.6 million.
In July 2023, the Group also completed the acquisition of 25% of the issued
share capital of PT United Kingdom Indonesia Plantations and the 10% of the
issued share capital of PT Mitra Puding Mas, from PT. Canadianty Corporindo,
the minority shareholder in Indonesia, for a total cash consideration of
$25.2million, increasing the Group ownership interest to 100%.
In November 2023, the Group also completed the acquisition of 20% of the
issued share capital of PT Tasik Raja, PT Hijau Pryan Perdana, PT Bina Pitri
Jaya, the 10% of the issued share capital of PT Alno Agro Utama and the 25% of
the issued share capital of PT Musam Utjing, from PT Marison Nauli Ventura,
the minority shareholder in Indonesia, for a total cash consideration of $60
million, increasing the Group ownership interest to 100%.
The following is the schedule of additional interest:
2023
$000
Consideration paid to non-controlling shareholders 87,808
Carrying value of the additional interest (99,493)
Difference recognised in retained earnings (11,686)
The total consideration of $86.6 million was in cash with the remaining $1.2
million being offset against an existing loan.
Acquisition of additional interest in RAA, KKST, ELAP, CPA and SGM in 2022.
On 10 October 2022, the Group acquired an additional 10% interest in the
voting shares of CPA, increasing its ownership interest from 90% to 100%. At
the same financial year on 30 November 2022, the Group also acquired an
additional 5% interest in the voting shares of RAA, KKST, ELAP and SGM,
increasing its ownership interest between 86% and 100%. Total consideration of
$5,883,000 was paid to the non-controlling shareholders. The carrying value of
the net assets of RAA, KKST, ELAP, CPA and SGM was $63,270,000. Following is
the schedule of additional interest acquired in RAA, KKST, ELAP, CPA and SGM:
2022
$000
Consideration paid to non-controlling shareholders 5,833
Carrying value of the additional interest 3,175
Difference recognised in retained earnings 9,008
32 Prior year restatement
The deferred tax assets were not recognised in FY2022 because of the
understanding that generally capital losses cannot be utilised to offset
against future trading profit. Following the finalisation of the 2022 accounts
and through further research, the Group identified a provision in the
Indonesian tax law which allows capital losses from trading assets to be
offset against future trading profit.
The effects of the restatements are summarised as follows:
2022
$000
Impact on consolidated income statement
Profit for the year 95,657
Effect of change in restatement:
Tax expense 11,683
11,683
Profit for the year after restatement 107,340
The effect of the prior year adjustments had a positive impact on the earnings
per share before BA of 23.39cts and a positive impact on the earnings per
share after BA of 23.40cts for the year to 31 December 2022.
2022
$000
Impact on consolidated statement of comprehensive income
Other comprehensive expenses for the year before restatement (54,798)
Effect of change in restatement:
Gain on exchange translation of foreign operations (684)
(684)
Other comprehensive income for the year after restatement (55,482)
The following table summarises the impact of this prior year restatement on
the Consolidated Statement of Financial Position:
Balance as reported Restated balance at
31 December 2022 31 December 2022
$000 Effect of restatement $000
$000
Impact on consolidated statement of financial position
Deferred tax assets 1,832 10,941 12,773
Deferred tax liabilities (805) 58 (747)
Exchange reserves (288,891) (543) (289,434)
Retained earnings 712,919 9,272 722,191
Non-controlling interests 109,595 2,270 111,865
33 Events after the reporting period
There were no events after the reporting period which would be required to be
disclosed in these financial statements.
Note: The information communicated in this announcement is
inside information for the purposes of Article 7 of Market Abuse Regulation
596/2014.
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